How a Founder Can Put Money Into a Company: Loans, Financial Assistance, and Capital Contributions

To pay rent, taxes, or purchase inventory using a founder’s money, a company must first establish the basis on which it receives the funds. If the money must be repaid, use an interest-free loan—a repayable financial assistance arrangement. If repayment is not planned, choose non-repayable financial assistance or a properly documented capital contribution. The choice affects the documents, accounting, and taxes.

Before transferring funds, agree on the terms with your accountant, check the signatory’s authority, and prepare an agreement or corporate resolution. State the actual purpose of the funds in the payment document. The rules below apply to Ukrainian companies, especially limited liability companies (LLCs); sole proprietors are covered separately.

Choose a funding method before transferring money

A founder and a company are separate parties in legal relationships. So a payment description such as “own funds” is not enough to explain why an owner’s personal money is being credited to a legal entity’s account. The company must determine whether the funds create a debt, income, or an increase in capital, and keep the corresponding documents.

The Tax Code of Ukraine (TCU), in subparagraph 14.1.257, defines repayable financial assistance as funds received under an agreement without interest or any other charge for their use, subject to an obligation to repay them. Under civil law, this transfer of money is a loan. The lender may be a founder, director, another individual, or another company; a person’s status as a founder does not make the loan interest-free.

Practical recommendation: if the owner expects the money to be repaid after seasonal inventory sales, document the funding as debt from the outset. Do not create an agreement for services the company will not actually provide. Paragraph 44.1 of the TCU prohibits determining tax figures from unsupported data, while Article 9 of the Law on Accounting requires primary documents for actual business transactions.

How to document an interest-free loan to a company

Agree on the contract and proof of transfer

Loan rules are set out in Articles 1046–1053 of the Civil Code of Ukraine (CCU). Under Article 1046, a loan agreement is concluded when the money is actually transferred. Therefore, a signed document should be supplemented with a bank statement or proper cash documents.

Use a written agreement to fund a legal entity: the written-form requirements follow from Articles 207, 208, and 1047 of the CCU. The law does not require a standard monetary loan agreement to be notarized solely because a founder transfers the money in cash.

In practice, it is advisable to include these terms in the agreement:

• Parties and signatories. Identify the lender and the company, and specify the documents confirming the authority of its representative.
• Amount and funding method. Set the total amount, transfer method, and whether the money may be provided in several separate payments, or tranches.
• No charge. State explicitly that no interest, fees, or other charges for use of the funds will accrue.
• Repayment. Set a final date or a schedule showing the amount and due date of each payment, the lender’s account, and the terms for early repayment.
• Changes and notices. Specify how the parties will sign amendments and deliver demands.
• Liability and security. Agree on the consequences of breaches, taking into account any mandatory temporary rules in force under the law.

Example wording: “The loan is interest-free. No interest, fees, or other charge for the use of the funds will accrue or be payable. The borrower must repay the amount actually received in accordance with the schedule attached to this agreement.” The remaining terms should be tailored to the specific funding arrangement.

Without an express interest-free term, Article 1048 of the CCU may apply: the lender is entitled to interest, and if the rate is not agreed, it is set at the National Bank of Ukraine (NBU) discount rate. Exceptions for certain loans between individuals are not a general exemption for company funding.

Check who will sign for the company

If the director is also providing personal funds, having the director sign the agreement on behalf of both parties creates a risk of a conflict of interest. Article 92 of the CCU requires a manager to act in the legal entity’s interests and avoid such conflicts, while Part 3 of Article 238 restricts a representative from entering into transactions in their own interests.

Practical recommendation: adopt a resolution through the competent body and appoint another authorized signatory for the company. Check that person’s authority under the charter, a resolution, or a power of attorney. Approving the funding amount alone is not enough if the representation issue remains unresolved.

Also review Articles 44 and 45 of the Law of Ukraine “On Limited and Additional Liability Companies” (the “LLC Law”). As a general rule under Part 2 of Article 44, a transaction with a value exceeding 50% of net assets according to the latest approved financial statements requires approval by the general meeting, unless the charter provides otherwise. The charter may set other criteria for significant transactions and procedures for approving transactions involving an interested party. Splitting one significant transaction into several does not remove the requirements of Article 44.

How to transfer funds through a bank or cash desk

Transfer to the company’s account

In practice, it is convenient to transfer the money directly from the lender named in the agreement to the company’s account. For example, the payment details could say: “Provision of interest-free repayable financial assistance under Agreement No. 7 dated 10.10.2026, tranche 1.” For repayment, use wording such as “Repayment of the principal amount of repayable financial assistance…” and include the details of the same agreement and the relevant tranche.

Keep the agreement, approval resolution, payment document, and statement confirming the funds were credited. As a practical measure, also prepare documents explaining the source of the lender’s personal funds, such as savings statements or documents showing income received. The agreement explains the basis for funding the company, but by itself does not prove the source of the lender’s money.

Cash assistance: limits and documents

Points 6 and 7 of NBU Regulation No. 148 set the following daily limits for cash payments with one counterparty under one or more documents:

• between business entities: up to and including UAH 10,000;
• between a company and an individual acting outside their business activity: up to and including UAH 50,000.

These limits also cover transactions not directly related to sales. They must therefore be considered both when receiving and repaying a cash loan. Ordinary funding of a company by its founder does not become charitable assistance simply because the agreement uses the word “assistance,” and it does not automatically qualify for an exception under Point 8 of the Regulation.

For amounts above the limit, transfer funds from account to account or deposit them with a payment service provider’s cash desk for onward transfer to the company’s account. Under Point 10 of the Regulation, the credit to the recipient company is treated as a cashless payment. If the money did not enter the company’s cash desk, there is no need to record it as cash received by the company.

If the lender delivers the money directly to the company’s cash desk, the cashier accepts it using a cash receipt order (CRO), issues a receipt, and records the full amount in the cash book on the day it is received. Repayment is documented using a cash disbursement order, with confirmation that the funds were received. These requirements follow from Points 11, 25–28, 39, and 40 of Regulation No. 148.

The company must also observe its cash balance limit and the rules for depositing any excess. If no limit has been set, it is considered zero; however, Point 54 sets conditions under which cash deposited or used on time is not treated as exceeding the limit.

Receiving a loan that is not payment for goods or services is not a settlement transaction under the definition in Article 2 of the Law of Ukraine “On the Use of Registrars of Settlement Transactions in Trade, Catering, and Services”. Therefore, receiving such a loan does not itself require a settlement receipt from a registrar of settlement transactions (RRO) or a software registrar of settlement transactions (PRRO). The company must still follow cash desk procedures. Do not issue a sales receipt to explain the receipt of loan funds.

How to account for assistance and determine the tax consequences

A company on the general tax system

When a company receives a loan, its cash balance increases and it recognizes a liability to the lender. For the borrower, this is a loan payable. If the liability is properly recognized, the principal amount of the loan does not meet the income criterion in Point 5 of National Accounting Standard (NAS) 15 “Income”: receiving money does not increase equity.

Under subparagraph 134.1.1 of the TCU, corporate income tax is calculated based on financial results, with adjustments required by the Code. There is no general rule for an ordinary corporate income taxpayer that “the entire loan becomes income if it is not repaid within 12 months.” A missed contractual payment date also does not, by itself, extinguish the debt.

However, the accountant must assess the term and value of the liability. Under Points 4, 9, and 11 of NAS 11 “Liabilities”, current liabilities are recorded at the settlement amount, while long-term liabilities are recorded at present value—that is, the discounted amount of future payments. Current status is determined with regard to the operating cycle and the twelve months from the balance sheet date.

Practical recommendation: before signing a long-term loan, ask your accountant to determine how it should be measured, and review that assessment if the term is extended. An “interest-free” term does not waive discounting rules. A “365 days” term also does not replace an analysis of the actual terms and debt classification. Companies applying International Financial Reporting Standards assess the transaction under their own standards.

If the creditor forgives the debt, or the obligation no longer has to be repaid on another valid legal basis, income may arise. The relevant rules are in Point 5 of NAS 11 and Point 15 of NAS 15. The accountant should therefore receive all amendments and documents confirming the extinguishment of the debt.

A company on the single tax: track the 12 calendar months

Under subparagraph 3 of Point 292.11 of the TCU, repayable financial assistance is excluded from the income of a single-tax payer if it is received and repaid within 12 calendar months from the date of receipt. Count the period from the actual receipt of each amount. Signing the agreement before the transfer does not start the clock.

Calculate the 12 calendar months using the calendar. Replacing them with 365 days may produce the wrong date. Extending the repayment term in the agreement does not extend the 12-month deadline for excluding the assistance from taxable income.

Illustrative example. The company received UAH 120,000 in one tranche. Before the end of the 12 calendar months, it repaid UAH 75,000. The unpaid balance is UAH 120,000 − UAH 75,000 = UAH 45,000. The condition for excluding that UAH 45,000 from income has not been met, so it must be included in the income for the relevant reporting period. If the company later repays this balance, that repayment does not automatically entitle it to reduce the income previously recognized: Point 292.11 contains no special general rule allowing that reduction.

If the money is received in several tranches, create a separate register entry for each one. In practice, specify in the documents which receipt each repayment settles, and set an internal reminder well in advance so the accountant and manager have time to review the balance.

How to repay the loan and what to do if payment is delayed

Before repayment, the accountant reconciles the amount actually received, previous repayments, and the balance under the agreement. The company transfers the money to the proper creditor with a clear payment description and keeps proof of performance. For cashless repayment, Article 1049 of the CCU treats the obligation as performed when the money is credited to the lender’s bank account, so initiate the payment in advance.

If no repayment date is set, or the date is determined by a demand, Article 1049 requires the borrower to repay the money within 30 days after the demand is presented, unless the agreement provides otherwise. The absence of a specific date does not automatically make the loan non-repayable. An interest-free loan may be repaid early unless the agreement provides otherwise.

Under the general rules in Articles 625 and 1050 of the CCU, a delay in repaying a monetary loan may lead to a claim for the debt plus inflation losses and three percent per annum, unless a different interest rate is set by the agreement or law. If repayment in installments is agreed, missing an installment gives the lender the right to demand early repayment of the outstanding balance.

A special temporary rule applies to loans. Point 18 of the Final and Transitional Provisions of the CCU exempts a borrower, during martial law or a state of emergency in Ukraine and for 30 days after it ends or is cancelled, from liability under Article 625 and from penalties for late payment under an agreement where a bank or another lender provided a loan or credit. Payments for late payment covered by this point and accrued from 24 February 2022 inclusive must be written off. This rule does not cancel the principal debt, agreed interest for using an interest-bearing loan, or the 12-month tax condition for a single-tax payer.

Do not calculate the limitation period by simply adding three years to the missed payment date. For older debts, account for earlier statutory suspensions and extensions. From 4 September 2025, Law of Ukraine No. 4434-IX dated 14.05.2025 removed Point 19 of the Final and Transitional Provisions of the CCU, which had suspended the limitation period during martial law. As a practical step before writing off a debt, give a lawyer the agreement, demands, amendments, and payment documents so they can calculate the period for that specific debt under the rules of the CCU and its transitional provisions.

Repayment to an individual and tax reporting

Subparagraph 165.1.31 of the TCU excludes from an individual’s taxable income the principal amount of repayable financial assistance that the individual provided to others and that is repaid to them. To apply this rule, the company must document that it is paying back the principal amount of assistance previously received.

If the company separately accrues interest, it must be analyzed as a separate item of the individual’s income, with the company fulfilling its tax agent duties under Point 170.4 of the TCU. Point 170.1 governs rental income and is not a basis for taxing loan repayment.

Before payment, the accountant should also check how the repayment is reported in Appendix 4DF—the section for individual income and taxes withheld within the Tax Calculation. The absence of taxable income is not sufficient reason to ignore reporting. Under Article 51 and subparagraph “b” of Point 176.2 of the TCU, legal entities have a monthly reporting period. The quarterly reporting period provided by these rules for sole proprietors and people engaged in independent professional activity does not apply to a company.

When to choose non-repayable assistance or a capital contribution

Non-repayable financial assistance

If the provider does not expect the money to be repaid, agree on the form of the contract and the tax consequences before payment. If the transfer is, in substance, a gift, Articles 719 and 720 of the CCU apply. Use a written agreement to gift money to a company. Part 5 of Article 719 of the CCU requires notarization of a gift of currency valuables exceeding UAH 850 only between individuals.

This requirement does not apply to gifts of money to a company. If the donor is a business company, check whether its founding document expressly permits gifts; the law provides an exception for an agreement to donate funds for a specified purpose. The definition of non-repayable assistance is in subparagraph 14.1.257 of the TCU. For ordinary monetary support with no reciprocal obligations and no documentation as an owner’s capital contribution, income will generally arise: for a corporate income taxpayer, under accounting rules; for a single-tax payer, under Article 292 of the TCU.

Practical recommendation: do not leave a repayable agreement unchanged if the parties have already decided that the debt will not be repaid. Properly document the forgiveness or another lawful basis for extinguishing the obligation, and give the documents to the accountant. The owner’s verbal decision alone is not enough for proper accounting.

Increasing the LLC’s share capital

Before resolving to increase the share capital, check that all members have fully paid their contributions and that the company does not own a share in its own share capital. Article 16 of the LLC Law permits an increase only after all members have fully paid their contributions and prohibits it if the company owns its own share.

Article 17 of the LLC Law allows the share capital to be increased from retained earnings without additional contributions. This does not bring new money from the owner into the company. To raise additional funds from members or third parties, use Article 18.

1. Prepare a resolution to raise additional contributions. The general meeting sets the total increase, the coefficient required by law, the planned share capital, and the contribution deadlines.
2. Account for pre-emptive rights. Each member has the right to contribute in proportion to their share. After members exercise or waive that right, the participation of other members and third parties must comply with the meeting’s resolution.
3. Contribute the funds within the agreed period. The general deadline for members is no more than one year from the resolution. For the next stage of contributions from third parties and members, the law allows up to six months after the period for exercising pre-emptive rights ends, unless the resolution sets a shorter period. Part 8 of Article 18 allows different deadlines and procedures under the charter or a unanimous resolution adopted with all members participating.
4. Approve the result. Within one month after the contribution period ends, the meeting approves the contributions actually made, the sizes and nominal values of the shares, and the increased share capital.
5. Complete the formalities for the changes. Prepare the documents for state registration of the relevant changes and give the accountant the resolution and payment confirmations.

Article 18 also allows additional contributions to be made by setting off reciprocal homogeneous claims. If a member plans to use the company’s debt under a loan for this purpose, prepare a corporate resolution and documents confirming the set-off. Simply changing the debt label in the accounting records is not enough.

For a single-tax payer, subparagraph 8 of Point 292.11 of the TCU excludes funds and property contributed by founders or members to the share capital from income. Keep documents confirming that this is the basis for receiving the funds.

Contribution to additional capital

For this type of funding, first review the charter and the validity of the corporate resolution, determine the nature of the contribution, and decide how to account for it. Point 5 of NAS 15 excludes from accounting income an increase in capital funded by member contributions, but the payment must be properly recognized as a contribution to equity.

For the single tax, do not automatically extend the exemption for share capital to additional capital: subparagraph 8 of Point 292.11 of the TCU expressly refers to share capital. In practice, it is advisable to get a written opinion from your accountant on the specific documents and tax regime before transferring the money. The words “contribution to additional capital” alone do not guarantee that no tax will be due.

How a sole proprietor can add personal funds to a business account

A sole proprietor is not a legal entity separate from the individual, so an entrepreneur does not make a loan to themselves. To add money to their own business account, they must determine where the funds came from and how they should be reported under their tax system.

The State Tax Service of Ukraine (STS), in its guidance on a sole proprietor’s own funds, links its conclusion to the general tax system and Point 177.2 of the TCU: personal funds transferred to a business account are not sales revenue and are not recorded as income in the standard income and expense ledger. This conclusion should not automatically be applied to a sole proprietor on the single tax.

Practical recommendation: keep documents showing the source of personal funds and the transfer so you can explain the receipt. If a sole proprietor receives a loan from another person, prepare a separate agreement; for a recipient on the single tax, check the 12 calendar month condition. Do not apply the balance sheet rules for legal entities to sole proprietor accounting.

How to keep founder funding separate from sales in Torgsoft

In Torgsoft, the “Фінансовий документ” (“Financial Document”) mode is intended to record cash transactions and movements of funds in settlement accounts. The documentation provides for entering the counterparty, amount, financial analysis item, and payment purpose. In practice, it is advisable to create separate items for receiving and repaying financial assistance and include the agreement and tranche details, so the owner can review these transactions separately from customer payments.

To review cash movements, use filters for the period, counterparty, cash desk or account, and analysis item, then reconcile the records against bank statements and cash documents. The option to process a transaction through a fiscal registrar is available if it is configured at the workstation; according to the documentation, it records a cash deposit or withdrawal. This action does not document a sale and does not replace a loan agreement.

Keep a separate register of agreements, tranches, deadlines, and balances, and retain supporting documents. The responsible employee must manually link Torgsoft records to this evidence using the document details. Use the program’s record of cash movements together with legal documents and accounting records: the documentation cited here does not confirm that the software automatically performs legal loan checks, tracks tax deadlines, or signs agreements.

What to check before the first payment

1. Decide whether the company will repay the funds and agree on the funding method with your accountant.
2. Check the charter, whether corporate approval is required, and the signatory’s authority.
3. Sign an agreement or properly document a resolution to contribute to capital.
4. Agree on the amount, transfer method, and precise payment purpose; for cash, check the daily limit and cash documentation requirements.
5. After the funds are credited, keep proof and provide the documents to accounting.
6. For a loan, record every tranche in a register and track the contractual due date; for a single-tax payer, also track the 12 calendar months.
7. Before repayment, reconcile the balance and check the tax reporting for payments to an individual.

If the company is a Diia City resident that pays tax on special terms, do not apply the ordinary corporate income tax rules without a separate review: subparagraph 134.1.8 of the TCU sets a separate tax base for it. Before receiving funds, also arrange a separate review if the lender is a non-resident or the funding involves foreign currency.

Legislation for documenting company funding

• Civil Code of Ukraine dated 16.01.2003 No. 435-IV: Articles 92, 207, 208, 238, 625, 719, 720, and 1046–1053; Final and Transitional Provisions on temporary loan rules and limitation periods, including Point 18 on exemption from liability for late loan repayment.
• Law of Ukraine “On Limited and Additional Liability Companies” dated 06.02.2018 No. 2275-VIII: Articles 16, 17, 18, 44, and 45.
• Tax Code of Ukraine dated 02.12.2010 No. 2755-VI: subparagraph 14.1.257, Articles 44 and 51, subparagraphs 134.1.1 and 134.1.8, subparagraph 165.1.31, Point 170.4, Point 176.2, Point 177.2, and Article 292, including subparagraphs 3 and 8 of Point 292.11; Point 5 of Subsection 1 of Section XX on applying the UAH 17 amount to determine the tax-free minimum income in the cases it specifies.
• NBU Board Resolution dated 29.12.2017 No. 148 “On Approval of the Regulation on Cash Transactions in the National Currency in Ukraine”: Points 6–11, 25–29, 39–41, 50, 53, and 54.
• Law of Ukraine “On Accounting and Financial Reporting in Ukraine” dated 16.07.1999 No. 996-XIV: Article 9 on primary documents and accounting registers.
• National Accounting Standard 15 “Income,” approved by Order of the Ministry of Finance of Ukraine dated 29.11.1999 No. 290: Points 5, 15, and 19.
• National Accounting Standard 11 “Liabilities,” approved by Order of the Ministry of Finance of Ukraine dated 31.01.2000 No. 20: Points 4, 5, 9, and 11.
• Law of Ukraine “On the Use of Registrars of Settlement Transactions in Trade, Catering, and Services” dated 06.07.1995 No. 265/95-VR: Article 2 and Points 1 and 2 of Article 3 on the definition of a settlement transaction and the documentation of payments for sales of goods and services; these provisions distinguish receipt of a loan from a customer payment.
• Law of Ukraine “On Amending Section ‘Final and Transitional Provisions’ of the Civil Code of Ukraine Regarding the Resumption of the Limitation Period” dated 14.05.2025 No. 4434-IX: Point 1 removes Point 19 of the Civil Code’s Final and Transitional Provisions; Point 2 provides that the Law takes effect three months after the day following its publication, on 4 September 2025.