When you loan deposit cash into your business that is your own money, much like a loan, it is not taxable. Only EARNED income is taxable.
This is an important destinction to understand.
Similarly, taking cash out of your business for your own personal needs or purposes is not a tax deduction.
These are cash contributions or distributions and or loans in or loans repaid. None of these are taxable income or tax deductions.
To complicate matters, contributing property or assets to the business is also not taxable.
Only income you earn is taxable and only expenses incurred that are ordinary and necessary for the running of the business are deductible.
Well isn’t that simple! I know, you are groaning with “yes buts” right now. Let’s keep it simple though.
Also, you can see how critical good bookkeeping and records are. (Ihear you groaning again!) If income you deposit is NOT accurately categorized as a contribution or loan THEN it may fall into the bucket of taxable earned income in error. I have seen this many many times over the years and then we have to go back and amend tax returns. It gets messy. Keep good records and save yourself taxes and headaches.
For those of you who still have questions, please reach out to me.
AND if you are interested in learning more about business income tax deductions, you will want to meet THOMAS