How to manage business growth (and keep dreaming big) Jump to The first five years Managing business growth Dreaming big Five years ago, Charlie Hamer
Bonus tip: Read this if you’re lending company money to anyone
Once a startup company becomes profitable, it might temporarily loan or advance funds to founders, private shareholders or their associates.
This is okay, as long as the funds are paid back before the end of the financial year that they were loaned in. Why? Because of the ATO’s Division 7A rules, which are designed to stop company profits being distributed to shareholders as tax-free ‘loans’.
If there are outstanding loans at the end of the financial year, we work with startup founders on the best possible treatment, which might be a loan-with-interest, dividends or even salary.