Taxes
The tax treatment of an advance depends on how it is structured and how your accountant reads it. Here is what to keep and what to ask.
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At Merchant Fund Express, here is the short answer: How an advance appears on your books and return depends on structure and your accountant’s reading. Keep the records and bring the questions.
An advance is not a loan with interest, so the way it appears in the books and on a return depends on the structure and on your accountant’s reading of it. Treat anything you read online, including this page, as a prompt for questions, not as advice.
As debt, a purchase of receivables or something else.
Fees, costs and the difference between payback and proceeds, as your accountant treats them.
Whether any amount is income when received.
When the cost is recognized across periods.
An owner asks her accountant how to record the advance and how fees are treated, and brings the agreement, the funding statement and her debit log. The accountant recommends a consistent method and notes the deductions available. An owner who did not bring the paperwork spent two billable hours reconstructing it. Records are the product here.
Source: Merchant Fund Express.
Ask your accountant. Treatment depends on structure and circumstances. That is how Merchant Fund Express reads it on a real file.
Reporting practices vary. Keep your own records regardless.
Many are treated as business costs; confirm with a professional.
It can change reported expenses and cash flows. That is a conversation for your accountant.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
