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How to Record Income used for a Personal Expense in a Multi-member LLC?

I understand single or multi member LLCs are prohibited from taking payments as an employee. We recently paid off a personal loan by transferring the amount from the Business Checking to the Personal Checking and then paying it off via the Personal Checking debit card. The amount transferred was drawn from our business profit as income we planned to use. My question is how would that transfer be recorded in QBO? Would I create an Equity account type for Personal Expenses and then name it Owner's Draw to link to the transfer or do I link it to the Personal Checking account? Would business profit or income be solely considered Owner's equity? Thanks in advance.

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Best answer 04-26-2019

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Hi @fun-numbers -

No, there is no need for separate accounts for Retained earnings. At year-end, your accounting system will automatically take net income or loss from Income Statement and roll-into Retained Earnings on Balance Sheet and then that profit (or loss) is divided between partners per your Partnership Agreement, which states percentage of ownership, who gets how much of profit.

Then those amounts must go onto your personal income tax returns to pay income taxes on it.

 

So you really need to know two things before discussing how to distribute profit:

1) What does agreement say on who gets what?  How many partners?  Equal split or ?

2) What tax filing status did you choose to use?  (IRS 1040 Sch C or Form 1065 or 1120S)

 

I would strongly suggest you find the answers to those two questions before you proceed.

 

 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?


@fun-numbers wrote:

I understand single or multi member LLCs are prohibited from taking payments as an employee. We recently paid off a personal loan by transferring the amount from the Business Checking to the Personal Checking and then paying it off via the Personal Checking debit card. The amount transferred was drawn from our business profit as income we planned to use. My question is how would that transfer be recorded in QBO? Would I create an Equity account type for Personal Expenses and then name it Owner's Draw to link to the transfer or do I link it to the Personal Checking account? Would business profit or income be solely considered Owner's equity? Thanks in advance.


just enter the payment and use member equity draw as the expense (reason) for the payment

 

For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)

[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

 

Any draw is personal as far as business accounting is concerned

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?


@Rustler wrote:

@fun-numbers wrote:

I understand single or multi member LLCs are prohibited from taking payments as an employee. We recently paid off a personal loan by transferring the amount from the Business Checking to the Personal Checking and then paying it off via the Personal Checking debit card. The amount transferred was drawn from our business profit as income we planned to use. My question is how would that transfer be recorded in QBO? Would I create an Equity account type for Personal Expenses and then name it Owner's Draw to link to the transfer or do I link it to the Personal Checking account? Would business profit or income be solely considered Owner's equity? Thanks in advance.


just enter the payment and use member equity draw as the expense (reason) for the payment

 

For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)

[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

 

Any draw is personal as far as business accounting is concerned


You lost me with your recommendation! There is no member equity draw expense. The default Equity types with the latest version of Quickbooks online are Opening Balance Equity, Owner's Investment, Owner's Pay & Personal Expenses, and Retained Earnings. Are you saying to add 8 more equity accounts? How would that help me in recording the transfer? Some detailed clarification is needed.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

You have an equity account called personal expenses?  Someone created that, and typically that is called equity drawing.

 

In a multi-member business each member/partner should have their own equity accounts, that is the only way to track how much the business owes to each.  That listing is my recommendation on how it should be set up

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

I'll wait for another recommendation.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

What I did was rename Owner's Pay & Personal Expenses to Owner A Withdrawals then I created another Equity Account Type with Detail type: Owner's Equity named Owner B Withdrawals. Repeated the process for the Owner's Investments equity account. After I was done, I created another Equity Account Type with Detail type: Owner's Equity, named it Owners Equity then nested the respective Owner's Investments and Withdrawals accounts as a sub-account under Owners Equity for ease of use. I think this is simpler but I'll check with my accountant to be sure.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

LLC rules depend on entity agreement set up and how you elected to file income taxes.  Rustler noted 2 of 3 options for LLC (Sch C or 1065) most likely from what you said, since 3rd one for LLC which I know best, is to elect to be taxed as S Corp (u get payroll). 

 

Regardless of which you chose, I agree with Rustler on how to record cash paid to Member.  

Attached is how I explain to clients, which might be helpful to understand the big picture. 

Cash moved from Business to Personal.  Debit Member's Equity account and Credit Cash.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Rustler - Definitely agree on how to record these transactions.  Summary account as you describe for each (owner/partner/shareholder) provides what I like to call "visual" accounting where you can see a balance for each person without having to add up anything.  I usually include their initials on their accounts so that even owners of LLC who are not the one designated as Finance guy can see. 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Rustler -

Believe it or not, I think QBO actually has that OMG account for Pay & Personal Expenses, since I recently had a client with exact same weird account and I thought for sure she made it up too or that one of her previous two CPA's set that up for her and did some very strange entries with it.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Fun-numbers:  Hopefully the Personal Checking, Debit Card or Personal-anything is not in QBO. Does not matter how the money was spent since that is all done outside of the business books.  QBO only needs to track who put in or took out how much from company and when, so that after year end when you compute income or loss and split between partners, you know who already was paid a portion of theirs in advance.  So yes, business net income or profit is added to equity before splitting between owners.  Attached another old easy explanation to hopefully tie these together. Business income/loss  >>  Retained earnings (part of Equity)  >>  Distributed to Partners Personal. Was just sending the attached to a client when I saw your post pop up.  

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Many thanks Teri for the clarification. This is helpful.

 

I actually found the Owner's Pay & Personal Expenses equity account to be helpful along with a little description as to the purpose of the account. As part of the other 4 equity accounts I listed that were set as defaults (at least for my version of Quickbooks online), I can see the direction the QBO product team is taking to support new users. Kudos to them. Sometimes when perception from past experiences meets product direction, it can create unclarity.

 

"Cash moved from Business to Personal. Debit Member's Equity account and Credit Cash."

  • We had created a chart account called Personal Checking Account for each LLC member to represent the Cash account and to capture Cash moved from Business to Personal. For example: Owner A Withdrawals to Owner A Personal Checking, and Owner B Withdrawals to Owner B Personal Checking

 

"Hopefully the Personal Checking, Debit Card or Personal-anything is not in QBO."

  • The Personal Checking accounts are not connected or synced to our actual personal bank accounts in QBO. They are mainly used to reference each LLC member's Cash account. We find this easier to understand on our end especially when recording cash moved from Business to Personal.

 

Quick question - Do you recommend having LLC members having their own Retained Earning equity accounts? For example: Owner A Retained Earnings and Owner B Retained Earning.
Also, what approach is recommended when it comes to LLC members taking withdrawals and enjoying their earnings? We're thinking monthly withdrawals.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Hi @fun-numbers -

No, there is no need for separate accounts for Retained earnings. At year-end, your accounting system will automatically take net income or loss from Income Statement and roll-into Retained Earnings on Balance Sheet and then that profit (or loss) is divided between partners per your Partnership Agreement, which states percentage of ownership, who gets how much of profit.

Then those amounts must go onto your personal income tax returns to pay income taxes on it.

 

So you really need to know two things before discussing how to distribute profit:

1) What does agreement say on who gets what?  How many partners?  Equal split or ?

2) What tax filing status did you choose to use?  (IRS 1040 Sch C or Form 1065 or 1120S)

 

I would strongly suggest you find the answers to those two questions before you proceed.

 

 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Hi @fun-numbers - Glad to help.  I work with small business owners who have Govt contracts, but they start with the same basic accounting requirements as any business of course so I hate to see anyone confused and want to help if I can.  I am a small business owner myself (S-Corp) but as an Accountant for decades all of this stuff is so easy to me know it can be confusing to others.  Cannot imagine how any business owner could not understand his own accounting or at least the basics of what is what and where it comes from on their own financial statements so

 

I am a major proponent of training owners to know what is what, even if they choose to utilize a bookkeeper.  Unfortunately, as in any profession, there are some horrible bookkeepers, CPA's and accountants that can really screw things up for clients and in my job I see more than my fair share.  Of course, small business owners need to minimize expenses, so they hire the cheapest person they can find and usually learn why they were so cheap the hard way. The horror stories I could share!

 

So when I saw your reply to Rustler, I just had to respond, since he is totally correct. I do not know him personally, but have seen him on here for years and can see he knows accounting for sure, so he appears to be one of the good guys.  I think you can see that the document I shared that I wrote years ago, is almost exactly what he said.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

@fun-numbers - With regard to the Personal Bank accounts, glad to hear they are not connected, because the number one rule of owning a business is not to mix business with personal expense. This why that account called "Pay & Personal Expenses" totally freaks out Rustler, me and any good accountant who knows the number 1 rule.  

 

However, going back to those three tax choices, that is why you really need to know yours before you ask questions since there are some definite differences with what you can and cannot do.

 

For example, for a Sole proprietor who claims business expenses on IRS 1040 Sch C and his biz are the same legal entity.  So if the business gets sued from something, like a slip and fall in the office lobby, that person can potentially sue you for all you have and could end your business.   As a sole prop, they could also sue the owner personally and take all of his money house, car.

 

You probably heard about this and is likely why you formed an LLC, which says you are separate so they can only drain your business bank account, and not touch your personal assets, right? 

But that goes both ways, meaning you have to ACT as if you are separate legal entities, since if you don't, you could be taken to court where they could try to prove you were not acting like a business since you are co-mingling funds between biz and personal, so sue you for everything.

 

Examples could include having personal expenses and personal bank accounts on your books, and to win the case to sue you could be because you paid a personal loan with company funds.

Then wham-bam, you are out of business AND don't even have a house to go home to now.

That is why you need to these accounts on your books proving you do proper accounting to keep personal separate from business.  This is also why it does not matter what the money was for, it was personal.  Biz books just need to show who got the money and when he received it. 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Thanks again Teri for the detailed explanation. This is some invaluable information and I'll be sure to keep it in mind as I get more familiar with Quickbooks.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

The Issue with this account "Owner's Pay & Personal Expenses" for starters is that these are two DIFFERENT THINGS and if you mix them together in the same account, you are going to later have to pull them apart to do your accounting and income tax returns, which depends on the  Business Entity Type but is overridden by how you elect to do your taxes (Sch C, 1065,1120s).

 

Pay as in payroll is one thing, profit distributions are another amount paid to business owners,  and personal expenses are never business expenses. There is also reimbursement for business expenses paid to owners, like home office rent, new computer, phone, health insurance, even IRA contributions. so never want to mix those all together.  So I must give this a thumbs down.

 

My small business has all of these and would be a nightmare to combine them all together.


@fun-numbers wrote:

Many thanks Teri for the clarification. This is helpful.

 

I actually found the Owner's Pay & Personal Expenses equity account to be helpful along with a little description as to the purpose of the account. As part of the other 4 equity accounts I listed that were set as defaults (at least for my version of Quickbooks online), I can see the direction the QBO product team is taking to support new users. Kudos to them. Sometimes when perception from past experiences meets product direction, it can create unclarity.

 

 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

@fun-numbers - To partially answer your last question, about monthly payments to partners, my first thought would be that your LLC should elect to be taxed as an S Corp, so you get payroll paid automatically via direct deposit maybe along with health insurance and IRA contributions.

That is what I do so then I can just set my payroll to Auto-pilot and direct deposit once a year. 

 


@fun-numbers wrote:

Quick question
Also, what approach is recommended when it comes to LLC members taking withdrawals and enjoying their earnings? We're thinking monthly withdrawals.


Did you have CPA assist you with selection and set up of your business entity and tax elections?

I have never seen the benefit of being taxed as Sole Proprietor (where you can get sued easily), nor as Partnership, where none of the above goes on your company QB, so each partner has to do his own accounting for all those expenses, probably each having to get their own QB to do and their own individual accountant and tax person to do their taxes vs. company paying that. 

 

Monthly withdrawals would require someone to make sure your accounting is done correctly to calculate in advance how much net profit you will earn by year-end to pay to you in advance as you cannot have negative equity, since then you have to pay that back before year-end taxes.

 

These accounts you mentioned below, did you set them up as Cash or Equity accounts?

Since the entries would be opposite so could really mess you up.

 

  • We had created a chart account called Personal Checking Account for each LLC member to represent the Cash account and to capture Cash moved from Business to Personal. For example: Owner A Withdrawals to Owner A Personal Checking, and Owner B Withdrawals to Owner B Personal Checking

 

"Hopefully the Personal Checking, Debit Card or Personal-anything is not in QBO."

  • The Personal Checking accounts are not connected or synced to our actual personal bank accounts in QBO. They are mainly used to reference each LLC member's Cash account. We find this easier to understand on our end especially when recording cash moved from Business to Personal.

Suggest put Partner initials in account number or account name where you all can see your own.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?


@Teri wrote:

The Issue with this account "Owner's Pay & Personal Expenses" for starters is that these are two DIFFERENT THINGS and if you mix them together in the same account, you are going to later have to pull them apart to do your accounting and income tax returns, which depends on the  Business Entity Type but is overridden by how you elect to do your taxes (Sch C, 1065,1120s).

 

Pay as in payroll is one thing, profit distributions are another amount paid to business owners,  and personal expenses are never business expenses. There is also reimbursement for business expenses paid to owners, like home office rent, new computer, phone, health insurance, even IRA contributions. so never want to mix those all together.  So I must give this a thumbs down.

 

My small business has all of these and would be a nightmare to combine them all together.


@fun-numbers wrote:

Many thanks Teri for the clarification. This is helpful.

 

I actually found the Owner's Pay & Personal Expenses equity account to be helpful along with a little description as to the purpose of the account. As part of the other 4 equity accounts I listed that were set as defaults (at least for my version of Quickbooks online), I can see the direction the QBO product team is taking to support new users. Kudos to them. Sometimes when perception from past experiences meets product direction, it can create unclarity.

 

 


Hi Teri! Appreciate the response. Just clarifying a few things that I forgot to earlier:

1) What does agreement say on who gets what? How many partners? Equal split or ?

This was actually setup prior to officially launching  our business last year. After, we purchased Freshbooks at the time, and then this year we moved over to Quickbooks online.

2) What tax filing status did you choose to use? (IRS 1040 Sch C or Form 1065 or 1120S)

Multi-member LLC, that's taxed as a partnership (Form 1065) by default unless you elect S-Corp status, which we did not.

 

These accounts you mentioned below, did you set them up as Cash or Equity accounts?

Bank or Dummy Bank, since they're not connected to the actual banks. However, we made them inactive / disabled them, as the Equity accounts will suffice in recording Withdrawals and Investments.

 

The Issue with this account "Owner's Pay & Personal Expenses" for starters is that these are two DIFFERENT THINGS .... Pay as in payroll is one thing, profit distributions are another amount paid to business owners

 

They actually have a little note that says, "Money you took out of your business to pay yourself (not payroll expenses)." I do agree, it is not the best title. My point was by the QBO team setting Opening Balance Equity, Owner's Investments, Owner's Pay & Personal Expenses, and Retainers Earnings as default Equity Accounts (at least for my version of Quickbooks online), they are trying to help the new user understand the necessary equity accounts needed. Once the new user understands this, they can simply rename Owner's Pay & Personal Expenses to Owner's Draws or Owner's Withdrawals or Owner's Distributions.

 

Thanks so much! Really appreciate your feedback. We'll check with our CPA on how best to take out monthly withdrawals. Thanks again

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

@fun-numbers - Curious what you thought of Freshbooks, what made you leave that system?

S Corp election for taxes is submitted with your tax return for whatever year you make a change like now for 2019 and future.  You would not want to change prior year since did not pay payroll.

 

I'm not a CPA since I hate tax work, so not soliciting you here, nor giving tax advice.  I can only share what I have seen after doing accounting for 30 years with 75 small businesses (15 large).  

So of course, I have strong opinions about what have seen work best and all of my LLC clients have elected to be taxed as S Corp, even those as small as 2-3 partners and works very well.

 

Just FYI on some differences:

Sole Proprietors (Called Owners) are single entities and can Take Draws

LLC (Default Partnerships) (Called Members/Partners) - Can be above/below for tax 

S Corp (Called Shareholders) Usually employees so get Payroll & Take Distributions

C Corp (Stockholders) May be employees and get Payroll and/or just Get Dividends

 

My guess would be CPA will say don't, but is your choice, so be sure to understand why.

 

Hi Teri! Appreciate the response. Just clarifying a few things that I forgot to earlier:

1) What does agreement say on who gets what? How many partners? Equal split or ?

This was actually setup prior to officially launching  our business last year. After, we purchased Freshbooks at the time, and then this year we moved over to Quickbooks online.

2) What tax filing status did you choose to use? (IRS 1040 Sch C or Form 1065 or 1120S)

Multi-member LLC, that's taxed as a partnership (Form 1065) by default unless you elect S-Corp status, which we did not.

 

 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Curious what you thought of Freshbooks, what made you leave that system?

We liked Freshbooks when we first started then we realized it is geared more to managing expenses. Here's a breakdown of things we run into:

 

  • After connecting our banks accounts, we discovered Freshbooks does not sync bank transactions but rather imports the transactions via an import service. This is fine until you have to reconnect your bank account then have to deal with cleaning up duplicate transactions.
  • We found that Freshbooks only records income / payments that hit your bank account under certain circumstances. For example, if you deposit a client check to the bank or use a mobile payment service like venmo, etc., for direct payments to the bank, it would not show up on Freshbooks and would require manual creation. However, if you used their credit card options to take payments, it would update the invoices.
  • At the time we joined, they did not have a viable ACH option and it is something they just introduced prior to our exit. On comparison, it is an expensive option compared to what Quickbooks offers.
  • At the time we joined, their bank reconciliation feature was in beta. It was a buggy experience to say the least. They also utilize the import service for their bank reconciliation as well.
  • You cannot record bank transfers like you do in Quickbooks online.
  • Limited Chart of Accounts options and reporting features when compared to Quickbooks online.
  • At a glance, the yearly subscription might seem cheaper than the Quickbooks online subscription plans until you compare the features.
  • Their customer service is nice though.

In my opinion, if you're a sole proprietor of a small business running a few transactions consistently each month with a good accountant by your side, then Freshbooks will be just fine. However, immediately your business starts scaling then I would recommend Quickbooks online even with a good accountant by your side. More features and better accounting structure.

 

I'm not a CPA since I hate tax work ... I have strong opinions about what have seen work best and all of my LLC clients

  • Me too! Definitely appreciate sharing your strong opinions, very thoughtful. It helps in understanding some basics and nuances of accounting.
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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Thanks for sharing what you know about Freshbooks, always open to hear of new systems. 

Interesting, but would not work for my clients (Govt contractors), QBO is not good fit either.  They must do GAAP accrual-basis project cost accounting and compute indirect cost rates allocating total cost by contract, which QB has not figured out how to do in the last 30 years or they could get alot more customers.  These requirements apply to contractors as small as one owner/ employee so rules are the same for 1-500 employees and after that requirements scale up. So none of my clients are sole proprietors. Most are S Corp, C Corp or LLC taxed as S Corp, which I recommend if they are not already doing.  So many things I don't like about QB and QBO is even worse when you know accounting, unless that is the only accounting system you have ever seen, which is true for many. I do not like accounting system making decisions for me since that causes audit issues.

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

@fun-numbers - As mentioned, I am not CPA or EA and do not give tax advice, but as biz owner, one compelling reason I prefer S Corp to LLC for tax purposes is to pay less in payroll taxes since I believe as an LLC, you must pay 15.3% SE taxes (7.65% x 2) on that total amount paid to you.

 

Say the monthly paid to you is $15,000, so $180k/year, that is $2,295/mo. and $27,540/year just in Payroll taxes (FICA = SS & Medicare) before you even get to Income taxes on top of that.

 

As an S Corp, I can set my salary at $100k/year and count the other $80k as Profit Distributions, so pay Payroll taxes on $100k vs. $180k. So I still get $180k per year, but my payroll taxes (FICA) are only $15,300/year and my business pays half of that as a tax-deductible business expense.  Then only pay $7650/year vs. $27,540.  $20k less in payroll taxes.  That is just simple math to me.

 

Again, I do not know details of your tax situation or why you selected LLC Partnership for taxes.  Maybe you expect to have over 100 private shareholders or don't want to split profit equally or some partners have other businesses, but I would definitely want to know why from CPA.

 

Just FYI not all CPA's or Accountants are equally knowledgable and I find many who work with only small businesses get focused on Sole Proprietors, some know more on LLC's, but many never even work with Corporations, C Corp or S Corp, so maybe not familiar enough to say.

 

Noticed that Rustler only mentioned the first two of three options for LLC, so maybe that's what he knows best.  I am the opposite in that I worked for C Corporations for over 20 years and the last decade have worked with more S Corps, or LLC's filing taxes as S Corp so know most there. 

 

Any accountant with a Bachelor's degree learns about these entities in year one of accounting, maybe even in Chapter 1 of college textbook if I recall correctly, so for me that was in 1980, lol. We also all must take Income Tax courses, one business and one personal income taxes, but I don't do tax work, so don't stay current on the 5000 pages of IRC that are updated every year. 

 

Same for CPA's, who may only stay current on what they need to know for the work they do and some don't even do that.  I work with alot of CPA's that my clients have when they hire me and have seen some pretty crazy stuff for sure.  Have had more than one tell me they did not know or follow GAAP (Generally Accepted Accounting Principles) which is what CPA exam is based on! 

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?


@Teri wrote:

@fun-numbers - As mentioned, I am not CPA or EA and do not give tax advice, but as biz owner, one compelling reason I prefer S Corp to LLC for tax purposes is to pay less in payroll taxes since I believe as an LLC, you must pay 15.3% SE taxes (7.65% x 2) on that total amount paid to you.

 

Say the monthly paid to you is $15,000, so $180k/year, that is $2,295/mo. and $27,540/year just in Payroll taxes (FICA = SS & Medicare) before you even get to Income taxes on top of that.

 

As an S Corp, I can set my salary at $100k/year and count the other $80k as Profit Distributions, so pay Payroll taxes on $100k vs. $180k. So I still get $180k per year, but my payroll taxes (FICA) are only $15,300/year and my business pays half of that as a tax-deductible business expense.  Then only pay $7650/year vs. $27,540.  $20k less in payroll taxes.  That is just simple math to me.

 

Again, I do not know details of your tax situation or why you selected LLC Partnership for taxes.  Maybe you expect to have over 100 private shareholders or don't want to split profit equally or some partners have other businesses, but I would definitely want to know why from CPA.

 

Just FYI not all CPA's or Accountants are equally knowledgable and I find many who work with only small businesses get focused on Sole Proprietors, some know more on LLC's, but many never even work with Corporations, C Corp or S Corp, so maybe not familiar enough to say.

 

Noticed that Rustler only mentioned the first two of three options for LLC, so maybe that's what he knows best.  I am the opposite in that I worked for C Corporations for over 20 years and the last decade have worked with more S Corps, or LLC's filing taxes as S Corp so know most there. 

 

Any accountant with a Bachelor's degree learns about these entities in year one of accounting, maybe even in Chapter 1 of college textbook if I recall correctly, so for me that was in 1980, lol. We also all must take Income Tax courses, one business and one personal income taxes, but I don't do tax work, so don't stay current on the 5000 pages of IRC that are updated every year. 

 

Same for CPA's, who may only stay current on what they need to know for the work they do and some don't even do that.  I work with alot of CPA's that my clients have when they hire me and have seen some pretty crazy stuff for sure.  Have had more than one tell me they did not know or follow GAAP (Generally Accepted Accounting Principles) which is what CPA exam is based on! 


Thanks Teri! It is actually only two members at the LLC. The split is more 3:17 between members and we're planning to take a monthly income from the LLC according to the split. Are there any differences with an LLC electing S-Corp status versus an S-Corp?

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

3:17?  

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Re: How to Record Income used for a Personal Expense in a Multi-member LLC?

Yes! For the split ratio.

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