It doesn’t matter the source of revenue or the category of expense. They aren’t balanced against each other in any way at tax time, they are all just added up: money out versus money in.
Hmm. Perhaps there’s something I’m not getting. Is it only loans from pre-approved sources (like banks) which can have their interest written off, or loans from any source (like Jimmy the Nose who lives in the alley)?
The interest paid against a loan would be categorized as an interest expenses on your P&L. That would be captured on your tax filing and would reduce your taxable income by the amount of interest paid out in that tax year. It doesn’t matter who the loan was from for that to happen. You can make a loan from yourself to the business and charge the business a reasonable interest rate or the loan could be from anyone or business.
Hmm. Perhaps there’s something I’m not getting. Is it only loans from pre-approved sources (like banks) which can have their interest written off, or loans from any source (like Jimmy the Nose who lives in the alley)?
The interest paid against a loan would be categorized as an interest expenses on your P&L. That would be captured on your tax filing and would reduce your taxable income by the amount of interest paid out in that tax year. It doesn’t matter who the loan was from for that to happen. You can make a loan from yourself to the business and charge the business a reasonable interest rate or the loan could be from anyone or business.