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Why converting verbal loan to written agreement prevents audits

Unexplained cash looks suspicious. Protect your company by converting verbal loan to written agreement so you have clear evidence for any financial check-up.

Converting a verbal loan to a written agreement provides the documented evidence required to satisfy tax authorities that a transfer of funds is a non-taxable debt rather than taxable income. Without a formal contract specifying repayment terms, interest rates and collateral, the Internal Revenue Service may reclassify the transaction as …

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