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August 05, 2026
Building a business
Prepared by
Veles Consulting team
Veles Consulting team
One of the Most Important Numbers on Your Company's Balance Sheet.
Understanding the Due to Shareholder Account
You owe the company
(Due to Shareholder = Negative)
(Due to Shareholder = Negative)
Company owes you
(Due to Shareholder = Positive)
(Due to Shareholder = Positive)
Company pays your personal expenses
You pay company expenses personally
Why Does This Account Exist?
What Is the Due to Shareholder Account?
Business owners often pay personal expenses on behalf of the company or use company money for personal purposes.
Examples include:
Rather than treating every transaction as salary or dividends, bookkeeping records these transactions through the Due to Shareholder account.
Examples include:
- paying corporate expenses using a personal credit card;
- depositing personal money into the company bank account;
- withdrawing money for personal use;
- purchasing equipment personally for the business;
- paying yourself back for expenses you covered personally.
Rather than treating every transaction as salary or dividends, bookkeeping records these transactions through the Due to Shareholder account.
Many business owners look at two numbers:
However, one of the most important accounts is often overlooked:
Due to Shareholder (sometimes called Shareholder Loan).
This account keeps track of money moving between you and your corporation.
Think of it as an ongoing record of who currently owes money to whom.
Unlike salary or dividends, transfers through this account are usually not taxable by themselves because they are simply loans or repayments.
- their company's bank account, and
- their company's profit.
However, one of the most important accounts is often overlooked:
Due to Shareholder (sometimes called Shareholder Loan).
This account keeps track of money moving between you and your corporation.
Think of it as an ongoing record of who currently owes money to whom.
- If the company owes you money, the balance is generally positive.
- If you owe the company money, the balance is generally negative.
Unlike salary or dividends, transfers through this account are usually not taxable by themselves because they are simply loans or repayments.
Example 1 – The company owes you money
Example 2 – You take money from the company
Positive vs. Negative Balance.
How does it affect your financial statements?
Common misunderstanding.
Why your accountant may be concerned.
Good Habits.
What this means.
How we can help.
A positive Due to Shareholder balance generally means:
A negative balance generally means:
- you paid company expenses personally;
- you invested personal funds into the business;
- the corporation owes you money.
A negative balance generally means:
- you withdrew company money for personal use;
- the corporation has effectively loaned money to you.
The Due to Shareholder account appears on the Balance Sheet.
It does not directly affect:
This is why two corporations with identical profits may have very different shareholder loan balances.
One owner may have left all profits inside the company.
Another may have withdrawn significant amounts throughout the year.
It does not directly affect:
- revenue,
- expenses,
- profit, or
- corporate income tax.
This is why two corporations with identical profits may have very different shareholder loan balances.
One owner may have left all profits inside the company.
Another may have withdrawn significant amounts throughout the year.
Many owners think:
"The company has money in its bank account, so I can spend it."
Not necessarily.
Corporate money belongs to the corporation—not automatically to the shareholder.
Taking money from the company without proper planning can create shareholder loan issues and, in some situations, unexpected personal taxes.
"The company has money in its bank account, so I can spend it."
Not necessarily.
Corporate money belongs to the corporation—not automatically to the shareholder.
Taking money from the company without proper planning can create shareholder loan issues and, in some situations, unexpected personal taxes.
A growing negative Due to Shareholder balance can indicate:
Monitoring this account throughout the year often prevents unpleasant surprises at tax time.
- frequent personal withdrawals;
- poor separation between business and personal finances;
- potential shareholder loan tax issues;
- cash flow concerns.
Monitoring this account throughout the year often prevents unpleasant surprises at tax time.
Business owners can reduce problems by:
- paying business expenses from the company whenever practical;
- limiting personal withdrawals from corporate accounts;
- keeping personal and business banking separate;
- reviewing the Due to Shareholder balance regularly;
- discussing significant withdrawals with their accountant before transferring funds.
The Due to Shareholder account does not measure profitability.
Instead, it measures the financial relationship between you and your corporation.
Understanding this account can help you:
Instead, it measures the financial relationship between you and your corporation.
Understanding this account can help you:
- avoid unexpected tax consequences;
- improve cash flow planning;
- better understand your financial statements; and
- make informed decisions about salary, dividends, and personal withdrawals.
The Veles Consulting team can help you:
- review your Due to Shareholder balance;
- explain why it changed during the year;
- determine whether withdrawals should be repaid, paid as salary, or paid as dividends;
- identify potential shareholder loan tax issues before year-end; and
- help you understand your financial statements so you can make better business decisions.
Suppose your corporation earns a profit and has CAD 50,000 in its bank account.
You transfer CAD 10,000 to your personal account.
The bookkeeping records:
At this point, the withdrawal is not automatically salary or dividends.
However, if the amount remains outstanding too long, tax rules may require it to be included in your personal income.
You transfer CAD 10,000 to your personal account.
The bookkeeping records:
- Bank -10,000
- Due to Shareholder -10,000
At this point, the withdrawal is not automatically salary or dividends.
However, if the amount remains outstanding too long, tax rules may require it to be included in your personal income.
Suppose you purchase a new computer for your business.
Cost:
CAD 2,000
Instead of using the company bank account, you pay with your personal credit card.
The bookkeeping records:
Later, the company reimburses you.
The bookkeeping records:
No salary.
No dividend.
No additional tax simply because the company repaid money it already owed you.
Cost:
CAD 2,000
Instead of using the company bank account, you pay with your personal credit card.
The bookkeeping records:
- Computer Equipment +2,000
- Due to Shareholder +2,000
Later, the company reimburses you.
The bookkeeping records:
- Bank -2,000
- Due to Shareholder -2,000
No salary.
No dividend.
No additional tax simply because the company repaid money it already owed you.