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babalu_lu
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Joined: 10 Nov 2009
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Posted: 10 Nov 2009 at 22:16 \| IP Logged

Hello, i'm an accountant working for a small company here in California. ii only have less 2 years experience in accounting field so I'm not sure on how to go about this.

My employer would like finance the study of his niece from France who will be coming here in the US for 9 months. I'm not sure though if the money will be taken out from the business or directly from his pocket.

But what if my employer decides to finance the study thru company's money? How should I record it? what are the tax rules about it?

thanks in advance.

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anmore
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Posted: 10 Nov 2009 at 22:49 \| IP Logged

What type of business is it? S-Corp, Corp, partnership? In any case it is not a business expense unless it is some sort of employee benefit and niece is an employee. It will be a draw/income to the employer.

babalu_lu
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Posted: 10 Nov 2009 at 23:08 \| IP Logged

hi anmore. thanks for the reply!

We are registered as a corporation. The niece is not an employee and will study full time in a university. But i will have to write a monthly check for her expenses from the company's bank account.

we're using Quickbooks, so when I write a check, the credit would be Cash in Bank, what is the Debit?

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anmore
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Posted: 10 Nov 2009 at 23:49 \| IP Logged

Loan to Shareholder

Jeremy
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Joined: 30 Oct 2009
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Posted: 16 Nov 2009 at 19:11 \| IP Logged

Yes, i've seen this before. A company I audited booked it to shareholder distributions or loan to shareholders as refered to already. Contra-equity, shouldn't touch your P & L.

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