Associate current account

Are you going to partner in the framework of your existing company or business creation? Taking a current partner account is an important measure for the taxation and general maintenance of your business. Here you are given all the answers to your questions about the partner’s current account.

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  • What is Associate Current Account?
  • The conditions of a partner current account
  • How does a partner current account work?
  • Recoverable interest from current accounts of associates
  • Advantages and disadvantages of the current account of associates

What is Associate Current Account?

A partner’s current account is an account that a company and its partners will use in relation to its contributions. Contributions of a company corresponds to cash advances. They have diverse and varied goals . They can serve as a basis for the company’s financing policy, the development of a particular activity of the company, or even compensate for a shortfall of cash, temporarily.

Contributions present in a partner’s current account are usable by each official member of the company or company, according to the rules laid down and defined internally. However, the law is clear. This use is strictly regulated and will distribute the uses according to the statutes: natural person, legal person.

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Amounts present in a partner’s current account may be available to pay interest to partners .

The conditions of a partner current account

Specific conditions are at respect to be able to make a contribution to the current account of a partner:

  • In SARL and joint-stock companies (except SAS): one must be a shareholder, manager, member of the management board, director or member of the supervisory board of the SARL
  • In SAS, you must either be an associate or an executive officer in order to have a partner current account.

Good to know : just as for a SARL, the president and officers of SAS are not obliged by law to be associated to make a contribution to a partner’s current account. Furthermore, the rules will differ depending on whether a natural or legal person is concerned.

How does a partner current account work?

Current accounts of partners are generally used as financing and as a contribution of funds. The contributions in the current account of associate are to be differentiated from cash contributions (paid directly to the capital of the company).

Contributions — in cash or in a partner’s current account — are used to finance a start-up or development inherent to the needs of the business. A partner or shareholder is not supposed to ask for a refund of his current account in this context.

Three types of financing typically fit a company:

  • The cash contribution: in the capital of the company
  • Current account intake
  • A bank loan for business development.

Did you know that? A current account contribution can be recovered, unlike sums that are paid in cash to the company’s capital. If the money is not recovered, it can be used to finance the company concerned, via investments, etc.

These accounts are a good alternative to bank financing or even the leasing system. On the other hand, their cost is lower and any partner can recover his interest or interest by claim for reimbursement. These decisions are usually seen between partners and account managers.

Recoverable interest from current accounts of associates

A partner’s current account is able to generate interest for all its holders: practical! Certain conditions exist in order to be able to deduct these interests from the taxable profit, including:

  • By agreement, the capital of the company concerned must absolutely be paid up
  • The rate of pay for these accounts must comply with legal limits
  • Taxation: Interest is treated as financial income if the account holder is a legal person and not a person Physical.

Pros and cons of the current account of associates

A partner current account is useful for a variety of reasons:

  • Its flexibility compared to social capital
  • Possible contribution reimbursement
  • Compensation by interest possible
  • Partners who do not generate profit may receive interest (unlike the dividend system)

However, some do not see only advantages but also some disadvantages:

  • The contribution to these accounts does not have the same guarantees as the capital contribution. Credit banks may request the blocking of contributions, especially if they wish to provide financing.
  • For a corporation producing profits distributed to shareholders and partners: persons who made majority contributions into account The current dividend will have only a lower dividend , since it is distributed according to the percentage of capital held.

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