I am working on 4 separate LLCs (A, B, C, & D) that share the same common owner. They are all in the same trade with their own sets of books, bank accounts, credit cards, etc. Historically at the end of the year the owner would cut checks from B, C, and D for expenses that were paid by A. These expenses are normally insurance and rent (all entities are listed on policies/leases). The reason for the end of the year is that the amount due is determined by percentage of revenue. Owner would then issue 1099s for these money moves. B,C,D would record the expense and A would record the revenue.
From a matching standpoint this makes sense - but I am wondering if someone has a better suggestion on how to handle this. Reading I see that asset/liability accounts should be established for the money moves - but is it wrong to just have A issue an invoice to each entity and have them pay? Thank you for the help and guidance.
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I thought so - would you issue 1099s as well (given the deadline is in a few days)? Granted I know you might not be able to give advice like that.
Thinking A records invoice as "Uncategorized Income" on P/L and B/C/D record expenses as Insurance (or whatever it is).
would you issue 1099s as well (given the deadline is in a few days)?
You would issue 1099s if the LLCs receiving the income are taxed as single-member LLCs or partnerships. If the LLCs are taxed as S corps or C corps, then issuing 1099s is not required.
Why is creating an invoice the best solution?
Wouldn't that show up as revenue on Company B QB and therefore taxable unless offset by another expense? I thought that since these are intercompany transactions the IRS considers them non taxable. Therefore an asset & liability account would make more sense I would think...
This is very short sighted on behalf of Intuit. This should be set to record intercompany cash transactions between entities which is what happens all in the accounting world. Rarely do I move materials and jobs between by companies. Its CASH! This feature needs a major overhaul
I do not agree. What she is talking about is splitting expenses between companies. There are no earnings involved. She is paying the bill from one company and then charging the other companies. This should simply reduce expenses in the first company and create expenses in the other companies.