- June 19, 2021
- Posted by: Stratford Team
- Category: Business
Safeguarding your cash.
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We’re still in a recession. And although signs abound of emerging from the bad times, there’s still a lot of financial weakness around. Business owners never know when creditors might want to seize possession of their assets to satisfy debts, with cash on hand the first and easiest target. How do protect that cash, which you will need once things are really back to normal? And can you do so in a tax-smart way? For advice, we asked Bruce Bell, an attorney at the Chicago office of Schoenberg Finkel Beederman Bell Glazer.
Larry Light: How can you, as a business owner, protect your cash without exposing the money to creditors?
Bruce Bell: One common strategy is to distribute excess cash to the business owner, who in turn loans the funds back to the company. The loans should be structured as arms-length transactions requiring a market rate of interest and a fixed repayment schedule. At some point, the loans…
