Hi Everyone,
I have a new client who just formed an LLC (and made s corp election).
Prior to forming the LLC and making the s corp election in September 2020, they had a Schedule C business.
They have a credit card which is primarily used for business expenses with a few personal here and there. My question is about recording the initial credit card balance in quickbooks.
I have currently recorded the initial credit card balance as follows:
DR Due from Shareholder (asset for llc) XX (amount here is the credit card balance at date of LLC formation)
CR Credit card liability XX (same as above)
Activity after this date has of course been entered as a debit to appropriate expense accounts, but this initial balance and payoff is what I want to make sure I have recorded correctly.
There is a payment on that same credit card made by the owners personal funds (which is where business income has been deposited up until the September formation of the LLC - future business income will be going into the LLC bank account). To record this credit card payment by the owner I have done the following:
DR Credit card liability XX
CR Due from Shareholder (asset account) XX
There remains a small balance in the due from shareholder account.
My question - have I done this correctly in entering the credit card balance as an asset to the LLC in a due from SH account? And then subsequently reducing that asset since the shareholder then paid the balance of the card from their personal account?
Thanks so much.
