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for LLC should I set up three different capital accounts? Under what name? Is this an Equity account?

I'm new to QBO 2018; I work for LLC, 3 partners who started business 2 years ago. No other employees. Do I set up three different capital accounts in Chart of Accounts? and what do i call them? Are these Partner Equity?  In QBO, there's no 'account name' called 'capital account'.

The partners invested 1,000 each initially.  Their capital at end of 2017 was $3,467. 

 

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Best answer 10-30-2018

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for LLC should I set up three different capital accounts? Under what name? Is this an Equity account?

What you want is 3 sets of equity accounts consisting of 4 accounts for each member. 

Member Overall Equity is a parent equity account that is never directly posted to but acts as a summing account for

<Member Equity

<Member Contributions

<Member Draw

 

You can nest these all under Owner Equity, to see the company picture at a glance if you wish.

Each one should have the name of the member in it such as John Smith Contributions, John Smith Draws. Money "in" is contribution any money out to partners is Draw. The owners/members of an LLC not taxed as a corporation cannot be employees of same.  Initial contributions would have or should have been posted as of contribution date in the contribution accounts. At year end profit or loss is posted to retained earnings and distributed to each member's equity. On Jan 1 of each year Draw and Contributions are rolled up to each member's third equity account so that draw and contribution start fresh each year. (if you did it on 12/31 it would show as zero for the year)

 

At what point in the 2 years are you starting to record in QB2018? Is there history from 2017 or even 2016 or was that kept in a different bookkeeping system?

 

What I am getting at is if QB2018 is only going to contain from 1/1/18 onward then you have the balance sheet from 12/31/17 to enter and this means each partner's equity account (#1 of each of their three child accounts) is $3467. DO you need to enter the $1000 of teh 3467 separate? Depends on how much historical data you need and if there is a bank deposit to reconcile other than from Opening Balance Equity.

 

Any multi-member LLC should have a retained tax CPA to advise and guide

View solution in original post

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Highlighted
Community Champion

for LLC should I set up three different capital accounts? Under what name? Is this an Equity account?

What you want is 3 sets of equity accounts consisting of 4 accounts for each member. 

Member Overall Equity is a parent equity account that is never directly posted to but acts as a summing account for

<Member Equity

<Member Contributions

<Member Draw

 

You can nest these all under Owner Equity, to see the company picture at a glance if you wish.

Each one should have the name of the member in it such as John Smith Contributions, John Smith Draws. Money "in" is contribution any money out to partners is Draw. The owners/members of an LLC not taxed as a corporation cannot be employees of same.  Initial contributions would have or should have been posted as of contribution date in the contribution accounts. At year end profit or loss is posted to retained earnings and distributed to each member's equity. On Jan 1 of each year Draw and Contributions are rolled up to each member's third equity account so that draw and contribution start fresh each year. (if you did it on 12/31 it would show as zero for the year)

 

At what point in the 2 years are you starting to record in QB2018? Is there history from 2017 or even 2016 or was that kept in a different bookkeeping system?

 

What I am getting at is if QB2018 is only going to contain from 1/1/18 onward then you have the balance sheet from 12/31/17 to enter and this means each partner's equity account (#1 of each of their three child accounts) is $3467. DO you need to enter the $1000 of teh 3467 separate? Depends on how much historical data you need and if there is a bank deposit to reconcile other than from Opening Balance Equity.

 

Any multi-member LLC should have a retained tax CPA to advise and guide

View solution in original post

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