Is there a case where it does makes sense to put write off salary as loans to the founders? As the OP indicated, any sophisticated investor would insist all the money goes "forward." But even if the company bootstrapped it to profitability, there would be no difference in tax due using this accounting practice, is there?<p>Is there any advantage at all to doing it this way?
Great post that brought back some memories. In 2001 I was hired by a startup that was in a very similar situation. When they ran out of cash 5 months later I could tell it was much harder on the founder than it was on me, since not only did he need to let me go but his startup dream was ending. He let me continue to use the machines until the doors finally closed, and I ended up landing a good contract position all negotiated from that very equipment.