I bought an incorporated business for 30K. It was a share purchase. How do I record payments to myself to recover my 30K?
submitted by maggie

Melly

Since you purchased the business via a share purchase, the $30,000 you paid is considered an investment in the company's equity.

If you want to recover it at some point, you can give yourself a dividend or a return of capital, depending on the company's profit and retained earnings.

If you do a dividend, you can record that as a reduction in retained earnings. As always, check your local laws and company policies. If you withdraw funds without dividends, it may be classified as a return of capital, which may have some tax implications.

josh

Because you bought the shares, that $30,000 you paid is like an investment in the company. If you want that money back once you start turning a profit, you can take dividends.

When you take a dividend, it will reduce your retained earnings on the books. Alternatively, if there's enough capital, you can do a direct return of capital, but there might be some tax things to consider. Just remember, the money isn't a loan, so you can't just "pay yourself back" like with a loan repayment. It's got to be a formal business transaction.