How to bring money to the company's balance sheet quickly and without risk?

When a company lacks sufficient funds on its balance sheet and urgently needs to make a payment, such as for rent or taxes, the business owner begins to look for ways to secure additional financing.

Let's consider effective ways to quickly deposit money into the company without complications and unnecessary risk.

How to replenish the company's balance to cover necessary expenses?

There are several ways to raise funds:

1. Increase the company's authorized capital: the necessary changes must first be made to the founding documents, and then the account should be credited with the agreed amount.

2. Transfer of money from another company as an advance payment for services or goods.

3. Providing financial assistance, which according to the current TCU can be either non-repayable or repayable.

When choosing one of the proposed methods, it is important to remember that funds cannot be deposited into the company's account "out of nowhere". When there is a need for additional financing, a service agreement can be concluded. During subsequent financial audits, it is difficult to verify whether such services were actually provided. However, in such a case, the deposited funds can be brought onto the balance sheet.

Another option is to use non-repayable financial assistance. Essentially, this is a gift of funds, so this operation will be taxed as income.

What is repayable financial assistance?

Repayable financial assistance is not bank loans, credits, or overdrafts, but rather a business operation. According to the TCU, a corresponding agreement must be drawn up to receive such funds.

That is, repayable financial assistance can be provided by companies or individuals, but only if these funds are used without personal financial benefit to the recipient.

Such financial assistance is not considered a loan because the money is provided on the condition of repayment and without the accrual of additional interest.

These are not financial services, so banks and other financial institutions cannot provide such assistance. However, any legal or natural person can receive it.

To receive repayable financial assistance, the main requirement must be met — no interest accrual. The agreement must also specify the terms within which the recipient must repay the full amount.

Types of repayable financial assistance

1. For individuals and Sole Proprietorships: the agreement is confirmed by a contract that must specify the amount of assistance and the terms of its full repayment. Such agreements can be signed for short or long terms. The document is recorded in the accounting report and listed as accounts receivable.

2. Assistance from the founder or director of the company: the legislation does not prescribe an exact form of the contract, so the document is drawn up on general principles, indicating the interest-free condition of the funds and the terms of their repayment. When receiving such assistance in cash, a contract must be drawn up and the fact of money transfer notarized. In this case, there is no need to use ECR.

3. Assistance between enterprises: the taxation procedure depends on the category of the legal entity. For example, Sole Proprietorships in groups 1-3, which are on the single tax, are not allowed to provide repayable financial assistance. As for legal entities, there are no such restrictions.

What should be specified in the repayable financial assistance agreement?

The document can be formatted according to a template approved by the enterprise. The agreement should specify:

• the subject of the agreement,

• the amount of assistance,

• the repayment term,

• the date of signing the document,

• responsibilities, rights, and obligations of the parties,

• details of the borrower and the service provider,

• signatures of the parties.

How is repayable financial assistance processed?

Transactions for receiving such assistance must be reflected in the accounting records. Since the legislation does not set clear terms for repayment, they must be specified in the agreement. The document can be concluded for a month or several years, depending on the agreement between the parties.

Repayment of financial assistance

The actions when repaying financial assistance are the same as when receiving it. The main thing is that the repayment term must be specified in the agreement, otherwise, such assistance will be considered non-repayable. This means that the recipient must include this amount in income, which may affect the tax regime.

When receiving interest-free repayable assistance, there are no tax obligations. It is not considered income, which means that the tax authorities will not charge tax on the received amount. However, if the recipient does not return the funds within the stipulated period, they will be fully added to the tax base.

What is non-repayable financial assistance?

Non-repayable financial assistance is:

• money transferred under a gift agreement,

• bad debt,

• the amount of a loan or credit, as well as accrued interest.

Such assistance is taxable, so it must be reflected in the company's tax return.

Therefore, to choose the most advantageous way of depositing funds into the company's balance, weigh all the "pros" and "cons". And remember that in any case, it is necessary to comply with the terms of the agreement to ensure that the company continues to operate without tax risks.