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Loan from Husband in the partnership firm

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ADNAN HUSSAIN

Student CA IPC / IPCC

131 Points Posted on 05 June 2020

Hello,

I have a partnership firm in which my mother is a partner and there is someone else the another partner, as we are the investing partner the whole of the capital was introduced by us in the firm. But the capital was introduced from my fathers account. So my doubt is:-

1. Whether the whole capital introduced in the firm from my fathers account shall be shown under capital account of my mother in the firm?

2. Whether it shall be shown as Loan From my father to the partnership firm?

Please suggest me which option shall be appropriate...

and whether it will create any impact if option 2 is selected as there will be more loans and the capital would be almost NIL, Whether it will create any issue if i would be filing for E- Tenders where i have to submit accounts copy?

Replies (1)

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 06 June 2020

Capital should be transferred from own accounts and not from different ones.

Next, loan is the correct treatment as your filing for taxes on trading income. Then, since your not paying any interest, your tax liabilities will be the same just like how there is no impact for capital.

You don’t have to worry about liabilities being more than equity because, if you make any new investments, I presume, you will still be qualified for investment allowances or other allowances.

Finally, the main draw back here is, you will not have any ownership interest in assets during the time of insolvency as your father will be qualified to claim your portion of assets for that amount.

The above are just assumptions.