Using funds from company bank account for personal items?

[pineapple]

With non-offshore companies you definitely wouldn't want to use funds from your company bank account for personal purchases, at least that's the case in my country. At least not without clearly documenting everything and paying it back to the company.

The idea being that you and your company are 2 separate legal entities, and you cannot be using funds from your company directly for your personal gain without first making the funds 'yours' through salary or dividends for example.

But if you're incorporating in an offshore country where there are no reporting requirements (as I asked in the post Which countries have no reporting requirements? ), then what are the possible repercussions or disadvantages of using company funds for personal expenses without first paying it out as salary or dividends. Is it still a terrible idea to use funds in this way?

The simplest example would be a customer of your offshore company pays $1000 for a purchase and it winds up in your company bank account (after the funds are released by the credit card processor). You have a Visa or MasterCard debit card attached to your company bank account. You decide to go to a store and buy yourself $1000 watch just for the hell of it using that company card.

 

[negon]

But if you're incorporating in an offshore country where there are no reporting requirements (as I asked in the post Which countries have no reporting requirements? ), then what are the possible repercussions or disadvantages of using company funds for personal expenses without first paying it out as salary or dividends. Is it still a terrible idea to use funds in this way?

Well it is not a terrible idea, you just need to get them taxed in your own country, unless you want to avoid tax! The benefit that "normal" companies have is that they can set off the salary towards their already tax to be paid. And the employee don't need to worry about tax, insurance etc. that is required by law to be paid, the company will do that.

So when people use a offshore comany to take out the money directly, then it is because it is much easier and some don't even pay tax from the money

 

[cosmo]

I'm using the funds from my offshore Company all the time without to think about accounting or anything else. It is the beauty to have an offshore account

 

[dirtyharry]

I withdraw all the money I need in the ATM and never think about to do any accounting or even put it in any books

 

[maxmoney]

Is that legal to do? Is there some tax office or other authority that will ask for documentation of the money you take out of the company?

 

[JohnLocke]

Is that legal to do? Is there some tax office or other authority that will ask for documentation of the money you take out of the company?

Legal I don't think so. Possible, yes it is and no one will ever ask you questions.

 

[Dandyline]

I was thinking about this. If u have a company in for example Dubai with a corporate account and are resident in Dubai, since there is no tax, can you just spend money on personal things directly from your corporate account? Or do you need to send money to a private account first?

 

[JohnLocke]

Wonder why no one ever answered the last post. Normally you will have to transfer the money from your corporate account to your personal account and pay taxes from the amount.

 

[TheCryptoAnt]

The difference between 'personal' and 'corporate' buys is just how creative you are.

 

[JohnnyDoe]

The difference between 'personal' and 'corporate' buys is just how creative you are.

And how flexible your accountant is

 

[JohnLocke]

And which country you are in. In some countries like Scandinavian countries you can get huge fines and in worst case you can go to jail!

While I'm aware of that some countries are not that strict there are countries which won't look at it with gentle eyes!

 

[Onassis]

In some countries it's allowed but treated as salary in kind and therefore subject to personal income taxes, maybe even social contributions as well.

I wonder if there's an increased risk of piercing the corporate veil in case this is done regularly? Are there any real world examples someone could share?

 

[TheCryptoAnt]

And which country you are in. In some countries like Scandinavian countries you can get huge fines and in worst case you can go to jail!

You can easily avoid this by claiming you are a refugee, laws dont apply to you anymore for what ive been told

 

[TheCryptoAnt]

In some countries it's allowed but treated as salary in kind and therefore subject to personal income taxes, maybe even social contributions as well.

It all comes down to how creative you are, really.

Are there any real world examples someone could share?

The difference between a 'flat' and an 'office in a building' is 0.
Same with going for dinner with your current hoe or 'with a client'.

etc, etc

 

[Forester]

In some countries it's allowed but treated as salary in kind and therefore subject to personal income taxes, maybe even social contributions as well.

I wonder if there's an increased risk of piercing the corporate veil in case this is done regularly? Are there any real world examples someone could share?

It all comes down to how creative you are, really.


The difference between a 'flat' and an 'office in a building' is 0.
Same with going for dinner with your current hoe or 'with a client'. etc, etc

It really all depends on the jusridiction; and it differs a lot! @James Spader is completely right on that in post #11.

You can easily avoid this by claiming you are a refugee, laws dont apply to you anymore for what ive been told

Unfortunately, for example in some EU countries it is completely true, AFAIK. (But it's OT. Not everyone can – just technically – claim that he/she is a refugee.)

 

[TheCryptoAnt]

It really all depends on the jusridiction; and it differs a lot! @James Spader is completely right on that in post #11.

True but question here would be why would you incorporate in such places.
The regulars here at the forum are not people looking to do biz nor even be remotely connected to those jurisdictions.

Unfortunately, for example in some EU countries it is completely true, AFAIK. (But it's OT. Not everyone can – just technically – claim that he/she is a refugee.)

If you are bright white you can try saying you are escaping ZA maybe? But yeah been brown and uncivilized is kinda the main requirement.

 

[wellington]

In the UK its completely normal to use a personal account for commercial, but becomes a nuisance for accounting if you co-mingle.

In other words don't co-mingle, as for buying stuff for yourself from the company, just follow industry norms and allowances and milk it for all you can (legally).

In some countries they get really crazy about this (US being one). so just make sure you follow the jurisdiction norms.