What is a Shareholder's Loan
What is a Shareholder’s Loan?
And Why Business Owners Shouldn’t Ignore It
If you’re a small business owner or incorporated contractor, chances are you’ve heard the term “shareholder’s loan” tossed around during tax time—or maybe you’ve seen it buried deep in your financial statements. But what is a shareholder’s loan, really? And more importantly, how could it affect your taxes and your business?
Let’s break it down in a way that actually makes sense—no accounting degree required.
First Things First: What is a Shareholder?
In short, a shareholder is someone who owns shares in a corporation—usually that’s you, the business owner. But being a shareholder doesn’t just mean owning a piece of the business. It also means the money flowing between you and the business needs to be tracked properly. That’s where the shareholder’s loan comes in.
So… What is a Shareholder’s Loan?
A shareholder’s loan is a way to track money going to or from the business owner that isn’t part of payroll or dividends. For example:
Did you pay for a business expense with your personal credit card?
Did you withdraw money from the company to cover a personal bill?
Did you put some extra funds into the company during a tough month?
All of these transactions can (and should) go through your shareholder loan account. Think of it as a running tally of what the business owes you—or what you owe the business.
Debits vs. Credits: Why It Matters
Here’s where it gets a little technical—but stick with us.
If your shareholder loan account is in a credit balance, the company owes you money. Nice, right?
But if it’s in a debit balance, you owe the company—and this could trigger some unwelcome attention from the CRA. If it’s not handled properly, it might be considered income (yes, taxable income), even if you never actually took any cash.
Common Mistakes We See
Borrowing from your business without understanding the tax consequences
Not keeping track of transactions between you and the company
Thinking, “It’s my business—I can take money whenever I want.”
Spoiler: CRA doesn’t see it that way.
Why We’re Talking About This
We're hosting a free Midday Masterclass on this exact topic:
“What is a Shareholder's Loan?”
This session will give you clarity on what the CRA expects, how to avoid common pitfalls, and what you should be doing right now to stay on the right side of the rules. If you’re already doing your own bookkeeping (or thinking about outsourcing it), this is the perfect opportunity to get informed—and maybe even save yourself from a future headache.
Need help straightening out your books before the CRA comes knocking?
Advantage Bookkeeping & Business Consulting is here to help—bookkeeping, payroll, tax prep, and coaching, all under one roof.
