Spending before the company exists
Founders often pay for a domain, software, legal work, and equipment before the company is formed. The company did not exist then, so it did not incur the cost. The usual fix is to document the spending and have the company reimburse the founder, or treat it as a capital contribution, once it is formed.
Keep receipts, record the date and purpose, and list the items in a short schedule. Some startup and organizational costs are deducted gradually, and your tax advisor can tell you how.
Reimburse or contribute
A founder who pays a company expense personally has two clean options. If the company reimburses the founder, record the expense and the payment. If the founder does not want repayment, record it as a contribution of capital, which raises the founder's equity. Do not leave it undocumented, and do not record it as company revenue.
For ongoing expenses, set up a reimbursement process with receipts and approval, so the company records the cost when it is incurred.
A founder loan is different
If a founder lends money, write a promissory note with the amount, any interest, and repayment terms. Record it as a liability. Repayment of principal is not an expense. If you charge no or low interest, ask your advisor about the tax rules for below-market loans.
Founders outside the United States
A non-U.S. founder can own a U.S. company. The practical issues are a few. A U.S. company needs a U.S. registered agent and a mailing address. Getting an EIN may need a special application process if you do not have a Social Security number. A U.S. bank may need extra identification, and some require a visit in person, while some online banks accept remote applications.
Foreign ownership also brings reporting. A U.S. company that is wholly owned by a foreign person may need to file information returns with the IRS even if it has no income, and the penalties for missing them are significant. Ask a tax professional about this before the first year ends.
Keep a clean line
Whatever the founder's location, the company should have its own bank account, its own books, and a record of every dollar that moves between the founder and the company. That record answers most questions from banks, investors, and tax authorities.
Frequently asked questions
Can the company deduct what I paid before it was formed?
Some of it, over time, as startup or organizational costs. The rules are specific, so keep records and ask your tax professional.
Can I get an EIN without a Social Security number?
Yes, through the IRS's process for applicants without one, which is usually handled by mail, fax, or phone. Follow the Form SS-4 instructions.
Do foreign-owned companies file taxes if they earn nothing?
They may still have information returns to file. Ask a professional early.