Legal Question in Business Law in Arizona
If, within the context of an LLC/partnership, additional funds are needed to operate a business, a partner injects capital, can the funds be considered simply "a loan" and recovered from the businesses future cashflow without taxation, and at will, without any formal loan agreement or any other guidelines? Or, must the cash be recovered with profits after tax.
1 Answer from Attorneys
You can make a loan to the LLC, however, you must observe the formalities of the separate legal entity and you must meet the requirements of the operating agreement, if you have one, or state law if you don't. Partnerships are different, they are controlled by the partnership agreement or the law as it applies to those entities.
You should consult with an attorney or your CPA, and be sure you make the loan properly with the right terms and conditions to achieve your goals.
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