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CCCBuilder
Level 1

Customer Paying Materials Invoice with cash, LLC paid material bill with checking, how to show cash went back to LLC Members?

Dumb question... but I had a customer pay a materials invoice for let's say 10,000.  This was not labor, just material cost that we passed onto the customer in an invoice.  My partner and I paid for those materials from our LLC Checking account.  We each took 5k cash from the customer and put it in our personal checking accounts.  If I make a transfer from the LLC Cash Vault to my partner and I, doesn't that look like we profited $5k when really we were just reimbursed?  Or does the fact we show member equity deposits way earlier on cancel out the member draw we took later (the 5k cash from LLC Vault?)

3 Comments 3
john-pero
Community Champion

Customer Paying Materials Invoice with cash, LLC paid material bill with checking, how to show cash went back to LLC Members?

Even though you see it simply as pass through, the LLC expenses the materials purchase, making it billable to customer. The customer invoice records it as income to be received (AR) payments x 2 are received into the books and deposited to Member Draw (x2) Since you probably cannot directly deposit to equity you trick the books by using a dummy cash clearing bank account to record deposits and then payout of draw to members

CCCBuilder
Level 1

Customer Paying Materials Invoice with cash, LLC paid material bill with checking, how to show cash went back to LLC Members?

Right, so basically I choose to 'receive payments' - chose customer & corresponding invoice > put in exact invoice amount and payment type of cash & date they paid > then go to record deposit > select that deposit coming from unallocated payments or whatever that account is called and choosing our LLC cash vault account  > then make a transfer from LLC cash account to each LLC Member Draw Equity account.  This seem correct?

john-pero
Community Champion

Customer Paying Materials Invoice with cash, LLC paid material bill with checking, how to show cash went back to LLC Members?

Yes, you got it exactly.

 

Undeposited Funds is the special account usually used as a holding account for money received in hand but not yet taken to the bank. 

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