loan questions regarding money loaned to LLC
hi all
My wife and I started two LLCs recently.
LLC #1 is her non-profit. This pays rent to LLC #2, which has the mortgage for the property.
In order to pay for the property we of course has to use personal finances for the building. Her LLC #1 is the only tenant. LLC #2 is run by the two of us, without any salaries or anything.
So my question is a few fold:
1. I assume that treating the money we paid out of personal finances for the % down for the property as a loan in the end will be best. This would be a loan that LLC #2 pays off. This would be instead of writing it off as a business expense.
2. I assume we should charge interest on the loan to the LLC. I cannot find the suggested rates of interest to charge.
3. I believe that we would have to declare the interest only as income - is that still the case since LLC #2 is an LLC?
4. I believe LLC #2 can declare the interest as an expense?
I am just a little confused how all of this comes into play. We are in NY state.
thank you!