To transfer money from your personal account to your business account, decide first whether the money is an equity contribution or a loan to the business, document that choice in writing, then move the funds by internal transfer, ACH, wire, mobile deposit, or a teller deposit. The mechanics take minutes. The classification is what determines your taxes, your deductions, and whether the transfer helps or hurts your liability protection later on.
Classify the Transfer Before You Move a Dollar
Every transfer from you to your business is one of two things, and you need to pick which before the money leaves your personal account.
An equity contribution (also called a capital contribution or owner’s investment) increases your ownership stake. For a sole proprietorship or single-member LLC, it goes into owner’s equity and raises your tax basis in the business. For an S corporation, it increases your stock basis, which controls how much of the company’s losses you can deduct on your personal return and how future distributions are taxed.
A shareholder loan means the business owes you the money back. You become a creditor. This is useful when you expect to pull the funds out later without triggering a taxable distribution, but the IRS scrutinizes owner-to-business loans closely, and a loan that doesn’t look real can be recharacterized as a contribution or a disguised dividend, producing a tax bill you didn’t plan for.
If you want the money back on a set schedule with interest, structure it as a loan. If you’re putting money in for the long haul, treat it as a contribution. Don’t leave it ambiguous.
What Makes a Shareholder Loan Valid
A shareholder loan needs a written promissory note signed at or before the transfer. The IRS looks for a stated interest rate, a fixed maturity date, terms enforceable under state law, a reasonable expectation of repayment, and evidence that the parties actually follow the repayment schedule.1Internal Revenue Service. Valid Shareholder Debt Owed by S Corporation Miss any of these and the loan is easier to reclassify.
The interest rate on the note must meet or exceed the IRS Applicable Federal Rate (AFR) for the month the loan is made. Charge less and the IRS treats the shortfall as imputed interest, taxing the lender on income they never actually received. For March 2026, the short-term AFR (loans of three years or less) is 3.59% annually, the mid-term rate (three to nine years) is 3.93%, and the long-term rate (over nine years) is 4.72%.2Internal Revenue Service. Applicable Federal Rates These rates change monthly, so check the table for the month your loan originates.
One exception matters for small transfers. For corporation-shareholder loans where the total outstanding balance stays at or below $10,000, the below-market loan rules don’t apply, unless the arrangement has tax avoidance as a principal purpose.3Office of the Law Revision Counsel. 26 USC 7872 – Treatment of Loans With Below-Market Interest Rates For loans under that threshold, you can skip the formal interest calculations, but still document the loan in writing.
Ways to Actually Move the Money
The classification lives on paper. The transfer itself is ordinary banking, and the method affects speed and cost.
Online or Mobile Banking Transfer
If both accounts are at the same bank, the internal transfer is usually instant and free. If they’re at different banks, you’ll need the receiving account’s nine-digit ABA routing number and account number to set up an external transfer.4American Bankers Association. ABA Routing Number – Find Your Number, and Search Database Use the memo field. Write “Owner Capital Contribution – June 2026” or “Shareholder Loan per Promissory Note dated 6/1/26.” That label becomes a contemporaneous record if you’re audited.
Mobile Check Deposit
Write a personal check payable to your business, endorse it “For Deposit Only” with the business account number, and photograph both sides in the business bank’s mobile app. Deposits made this way may face a hold of two business days before full funds are available, because Regulation CC treats non-in-person deposits differently from teller deposits.5eCFR. 12 CFR Part 229 – Availability of Funds and Collection of Checks (Regulation CC)
In-Person at a Branch
Bring a personal check made out to the business (or cash) with a deposit slip. Cash deposited in person is available the next business day, and a check handed to a teller generally clears faster than a mobile deposit because the bank can verify it immediately.6Federal Reserve Board. A Guide to Regulation CC Compliance
Wire Transfer
A domestic wire settles the same business day. Most banks charge $20 to $40 for an outgoing domestic wire, depending on whether you initiate it online or in a branch. Best when you need funds available immediately and can’t do an internal transfer.
Same-Day ACH and FedNow
Standard ACH between different banks takes one to three business days. Same-day ACH is now widely available for transactions up to $1 million per payment, settling within hours.7Nacha. Same Day ACH Your bank may charge a small fee for faster processing.
If both banks participate in FedNow, funds arrive within seconds, any time of day, any day of the year.8Federal Reserve Board. FedNow Service Frequently Asked Questions As of early 2026, roughly 1,650 financial institutions have joined FedNow, so availability depends on whether your specific banks are on the network.9Federal Reserve Financial Services. FedNow Service Participating Financial Institutions
Cash Deposits Over $10,000
If you deposit more than $10,000 in physical cash into your business account in a single transaction or in related transactions, the business must file IRS Form 8300 within 15 days of receiving the cash, and send a written statement to each person named on the form by January 31 of the following year.10Internal Revenue Service. Form 8300 and Reporting Cash Payments of Over $10,000 This applies even when the cash is your own money going into your own business. Checks, wires, and ACH don’t trigger it, because Form 8300 applies specifically to cash.
Splitting a large cash deposit into smaller amounts to duck the $10,000 threshold is a federal crime called structuring. If you have a legitimate reason to deposit large amounts of cash, make the deposit and file the form.
Record the Transfer in Your Books
The transfer needs to land in the right account in your accounting software the same day. The entry depends on the classification you already chose.
For an equity contribution, debit the business bank account (increasing the asset) and credit an owner’s equity account. In most small business accounting software, you record it as a deposit and select your equity account as the source. This increases the equity section of your balance sheet without creating a liability.
For a shareholder loan, debit the business bank account and credit a liability account named something like “Loan from Owner” or “Shareholder Note Payable.” The loan shows up as a debt the company owes, and any interest the business pays you becomes a deductible expense for the company and reportable interest income for you.
S corporation owners have an extra job: track stock basis carefully every year. Your initial contribution sets the starting basis, which then adjusts annually for income, losses, distributions, and deductions.11Internal Revenue Service. S Corporation Stock and Debt Basis Losing track of basis is one of the most common S corp mistakes and can produce unexpected taxable gain when you eventually take distributions or sell the business.
Why the Paper Trail Protects You
If you operate as an LLC or corporation, the clean line between personal and business finances is what keeps your personal assets protected from business creditors. Courts weighing whether to pierce the corporate veil put commingling of funds near the top of every list. Depositing business revenue into a personal account, paying personal bills from the business checkbook, or making undocumented owner transfers are the behaviors that lead courts to treat the entity as a sham. Smaller businesses face more scrutiny because the line between owner and company is already thinner. Other factors that raise the risk include starting the business without adequate capital and not keeping accurate financial records.
Every transfer between your personal and business accounts should carry documentation showing it was a deliberate, classified transaction: a descriptive memo line, a copy of the promissory note if it’s a loan, the transaction confirmation, and a same-day entry in the books.
The tax side has teeth too. Misclassifying a transfer or failing to report related income can trigger the IRS accuracy-related penalty, which adds 20% of the underpayment to your tax bill.12Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments The more common real-world consequence is losing deductions. If you loan money to your S corp and deduct business losses against that loan basis, but the IRS later decides the loan wasn’t valid debt, the loss deductions get reversed and you owe back taxes plus interest. If what you called a loan gets reclassified as a contribution, any interest the business deducted becomes disallowed. Getting the paperwork right when you make the transfer is dramatically easier than reconstructing it during an audit.