What Are Intercompany Loans, and Why Should You Care?

If you own more than one business, this post is for you.

Let’s say you have two or more companies. Maybe you run a gym, and you also own a real estate business or a marketing agency on the side. From time to time, you might move money between them to cover costs or help one out when cash is tight.

When money moves from one company to another, it’s called an intercompany loan.

And here’s the truth a lot of business owners miss:

👉 It matters. A lot.

What Is an Intercompany Loan?

An intercompany loan is when one business you own gives money to another business you own. It might be a loan to help cover payroll or to pay a bill. Sometimes, these loans are planned, and sometimes, they happen in a rush because one account is low on funds.

But no matter why the money moves, you’ve got to track it.

Every time a loan like this happens, it needs to be written down clearly in your accounting system. That’s because even if you are the owner of both businesses, each company is still seen as its own entity by the IRS. Each business has its own tax ID number (called an EIN), and each one needs to have its books kept clean and separate.

What Happens If You Don’t Track It?

Let’s say Business A gives $5,000 to Business B.

Here’s what should happen:

  • Business A records a loan receivable. That’s an asset. It shows that money is owed back to them.
  • Business B records a loan payable. That’s a liability. It shows that they need to repay what they borrowed.

Both balance sheets should show this loan. If they don’t match, your books are off—and that’s when tax problems, audit risks, and financial confusion show up.

I once spoke with someone who had 25 businesses, all moving money between each other. You can imagine the mess if even one loan wasn’t tracked right.

“But I Own All the Businesses—Does It Really Matter?”

Yes. It really does.

Even if the businesses all fall under your name, they’re not the same on paper. The IRS, your accountant, your bank—they all see them as separate companies. That means the money they borrow or lend has to be written down, just like it would be if you loaned money to a friend.

If it’s not tracked properly:

  • Your books will be wrong.
  • Your reports won’t tell the truth.
  • Your CPA will have to untangle a web just to file your taxes.

Keep It Clean and Simple

Here’s my advice:

  • Create a clear system for moving money between businesses.
  • Log each transaction in both sets of books.
  • Set a date for when the loan should be paid back.
  • Work with a bookkeeper or accountant who understands multi-entity accounting.

Don’t let intercompany loans get messy. Clean books help you make smart decisions—and that leads to less stress and more success.

Need help getting your business finances cleaned up?

That’s what we do every day. Helping business owners feel confident about their money is our favorite thing.