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Company Loans

Sometimes to keep your cash flow moving, you may need to loan your Company money.  This is perfectly legitimate, but make sure there is a written promissory note, with some reasonable interest rate, and some reasonable payment schedule.

I would recommend 1+prime as a minimum rate.  The prime rate has remained at 3.25% since the end of 2008.   Make sure you make timely interest payments and then report this interest as income on your 1040 form.

Accountable plans

If you reimburse employees for mileage, educational classes or other business expenses, you need to have a policy called an Accountable Plan.  If you do not have one, the IRS can re-classify all these reimbursements as taxable income. 

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