I run a small business and am splitting one of businesses into two legal entities, same ownership, no compensation involved, no operational changes. I've already consulted my CPA and legal, I have all that covered. However, I am now going from one company files to two. I need help in how to enter a few transactions in QB Desktop Pro 2017 across the two company files.
1) How do I record the movement of a long term asset from one QB company file to a new one. I think I create a journal entry in the existing business to credit the asset and debit my equity. In the new business, I will add the asset and credit my equity.
2) I had a third party make an equity investment in the existing business some years ago. How do I record the transactions that move this equity to the new business. I need to reduce the equity in the existing company file and increase it in the new company file.
Any thoughts, I'm trying to keep this simple. Happy to answer any questions
You consulted your CPA, but he is not advising you oh what or how to do things - odd relationship.
1. A long term asset should also have depreciation, journal the accumulated depreciation to the asset, and then journal the asset reducing equity.
debit accum depreciation credit the asset for the balance in accum depreciation account
debit equity and credit the asset for the balance in the asset account
2. Pay out the equity of the third party using equity drawing, then invest the same amount in the second company
@Rustler thanks for your reply, this makes sense.
A little more context. I use my CPA for strategy and returns, not bookkeeping questions. His rates are too high for that. Also, these are single member LLCs, no separate returns, K-1 to 1040 only.
@Rustler Thanks for the quick reply. Makes sense.
A little more context, I use my CPA for strategy and returns, not QB bookkeeping questions. He's too expensive for that. Also, I consider this low risk as these are single member LLCs, K-1s to 1040 only.