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sgfee123
Level 2

Moving Retained Earnings to Owner Equity

Hello Quickbooks Community,

 

Please help with a question.

$100,000 was moved directly from retained earnings to owner’s equity on New Year's Day.

Technically, this means the LLC made a distribution to its members then the members immediately made a contribution to the LLC. However, no money ever left the LLC. Is the $100,000 considered a distribution by the LLC, a contribution from the members, both or neither?

Follow-up question. Do members need to vote before making this kind of money movement?

 

Thank you for your help,

Steve F.

 

Solved
Best answer August 21, 2021

Best Answers
Rustler
Level 15

Moving Retained Earnings to Owner Equity

LLC has nothing to do with it, LLC is just a state legal registration that has nothing at all to do with how the business is done.

 

If the LLC files as a sole proprietor or a partnership, there is no such thing as a distribution. Retained earnings is transferred to the owner/partner in the proportion stated (partnerships) in the registration document, using a journal entry.
debit RE and credit the correct equity account (if there was a profit for the year).

 

There is no voting on the subject of retained earnings being transferred to the owner/partner.

View solution in original post

2 Comments 2
Rustler
Level 15

Moving Retained Earnings to Owner Equity

LLC has nothing to do with it, LLC is just a state legal registration that has nothing at all to do with how the business is done.

 

If the LLC files as a sole proprietor or a partnership, there is no such thing as a distribution. Retained earnings is transferred to the owner/partner in the proportion stated (partnerships) in the registration document, using a journal entry.
debit RE and credit the correct equity account (if there was a profit for the year).

 

There is no voting on the subject of retained earnings being transferred to the owner/partner.

View solution in original post

sgfee123
Level 2

Moving Retained Earnings to Owner Equity

Thank you for your help Rustler! You have answered my questions.

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