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haskenazi1
Level 3

Guaranteed Payments and expense reimbursements

Hi 

 

If a partner was paid back by the company for money he laid out for an expense, is this considered guaranteed payment? I am trying to reconcile our guaranteed payments accounts but not clear so far whether reimbursed expenses were classified as GP and not intuitively clear to me whether they should be or not.

 

Thanks 

1 Comment 1
QBsguru
Level 7

Guaranteed Payments and expense reimbursements

If a partner paid for an expense through personal funds, then this would increase that partner's equity account.  Guaranteed payments are compensation for work preformed in the business.  If paid and recorded as a guaranteed payment, that partner would pick up the income at the end of the year as indicated on their K1. 

 

Repayment for the expense should be recorded as a reduction in the partner's equity account.

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