Re: Business Bank Accounts
You really shouldn't have any problems. What you may want to do though is get letters from your friends stating that the money was given to you as a loan. It's doubtful that the IRS would snag you for $500, but you can have the letter just in case.
Re: Business Bank Accounts
Use promissory notes as documentation. Just get receipts when you pay them off. Should be simple and business-like. As it should be.
Re: Business Bank Accounts
The basic accounting balance sheet equation: Assets = Liabilities + Equities. (ALE, an easy way to remember it.) Right now, if you borrow the $500, you have an asset, cash in the amount of $500.00. On the right side of the equation, you have a liability, $500 and no equity. The Equation looks like this: $500 = $500 + 0.
If at the end of the month, you earn the $100 from the bank and pay back your lenders, your balance sheet looks like this: Assets $100 = Liabilities 0 + Equity (Retained Earnings) $100.
Your income statement looks like this:
Income
Bank Fees $100.00
Expenses -0-
NIBT $100.00
NIBT is Net Income Before Taxes. (This assumes you do not agree to pay interest on the $500 loans you took out. Otherwise, you would have interest expense. The proceeds of borrowing are not income and the repayment of debt is not an expense. (Not to be confused with forgiveness of indebtedness income. )
HTH
Z