I have a 2 member LLC partnership and I was going to close out the year end but had a few questions.
1. The first question is should I even bother closing year end and zero out retained earning to each partners equity for our business structure?
2. The second question is regarding a loss in the first year resulting in negative retained earning.
Here is how I planned to close out per recommendations in this community.
I set up three accounts for each partner:
-Equity
-Equity Drawing
-Equity Investment
Then do the following:
-Debit investment---Credit equity
-Debit equity---Credit drawing
-Debit retained earnings---Credit both partner equity for their portion
Here is where I am stuck, if it is negative retained earnings would I do the opposite and credit retained earning and debit partner equity?
Thank you for the help.
