In my business we decided to end a partnership as of December 2019. Per our agreement earlier I was both 70% owner and also provided services to the company because we could not afford to pay the full salary of such service. I provided the services based on the idea the company would pay my bills while it grows and the rest of my full salary would stay in the company to as a load from me. The partnership ended and now we need a to know how do we record the company paying me the balance owed to me? would dividend be better or how? by the way the company is continuing but me as the single member llc. Thanks
I am going to give you a bunch of free advice and first is you may need or benefit from a tax CPA to correctly dissolve the partnership np matter its entity type as well as get your NEW books set up properly.
Your single member LLC can be created from whatever you have left that is on your name after partnership dissolution but you should not continue the books forward. Start a new QB or QBO company file - you have a new federal ID as an LLC.
Much depends on how the K-1s over the past reported the 70/30 split. Per (hopefully) printed partnership agreement not only this but any guaranteed payments and/or recognition of equity contribution have been accounted for.
Dissolution will basically involve distribution of assets and settlement of liabilities. You in essence I think are buying out the existing partnership and whether your partner gets any residual money depends on if any is left, the value of what remains, and the value of your added equity above and beyond the 70/30 split based on your personal contributions.
You said it was a partnership. Only if the partnership were a Subchapter S corp or an LLC electing such tax treatment would there ever have been any salary involved for any owner, Simple partnerships and LLCs (including your new one) cannot pay the partners/members as employees as all profit/loss passes through to your personal return. There can be guaranteed payments to working partners and is a company expense before distribution of balance of profit/loss. Both the guaranteed "salary" and pass through of balance of profit are ordinary income on your personal return