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Paying an invoice out of one company that is for a different company owned by the same owner, What entry is needed?

I manage 5 LLC's and this happens often.  I am paying a bill out of Company A but the bill is for Company B.  This money will eventually be paid back.  Do I need to record a journal entry in both companies?  One showing a loan to and one loan from?  I don't know what other account to use to balance the journal entry.

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Best answer 10-15-2018

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Established Community Backer ***

Honestly, there is so much data going so many different d...

Honestly, there is so much data going so many different directions, using too many tasks. Let's review:

When you pay something on behalf of someone else, that is Your Asset - loaned to them.

They enter the expense and that they now Owe you = their liability. They can simply Write a check to you and list what they are paying you for, such as supplies or web hosting.

All of this inter-company stuff should really go away. Having a common owner doesn't mean Commingling is a good idea. The IRS and CPAs all will give you guidance on how this is affecting both entities under "Common control." A Lawyer would also give you great guidance on the follies of this mess.

There is no posting to AP manually. Nothing here is Unpaid.

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Established Community Backer ***

Honestly, there is so much data going so many different d...

Honestly, there is so much data going so many different directions, using too many tasks. Let's review:

When you pay something on behalf of someone else, that is Your Asset - loaned to them.

They enter the expense and that they now Owe you = their liability. They can simply Write a check to you and list what they are paying you for, such as supplies or web hosting.

All of this inter-company stuff should really go away. Having a common owner doesn't mean Commingling is a good idea. The IRS and CPAs all will give you guidance on how this is affecting both entities under "Common control." A Lawyer would also give you great guidance on the follies of this mess.

There is no posting to AP manually. Nothing here is Unpaid.

Established Community Backer ***

It is common practice for associated companies to optimiz...

It is common practice for associated companies to optimize their combined cash resources. Nothing wrong with that. The accountant needs to adapt to the business, not the other way around.
EEV
Not applicable

I wouldn't do a Journal Entry. Set up "Other Liability Ac...

I wouldn't do a Journal Entry.

Set up "Other Liability Account" (Loan to Company B). Then write a check to the vendor from Company A using the (Loan to Company B) Account..

Next write a check to Company A from Company B, under the expense tab enter "Accounts Payable", under customer:job in the check enter in the Vendor. This creates a credit on the vendor's  account.

Go to pay bills, click on the vendor's bill and click on apply credits.

Deposit the check in record deposits from Compay B into Company A. use (Loan to Company B) account.

This should do it.



Not applicable

That makes sense except the version of Quickbooks Company...

That makes sense except the version of Quickbooks Company B uses is an abbreviated version that has limited fields on the write check screen- I can make the check payable to Company A and use Accounts Payable as the account but there isn't anywhere to enter a customer job.
EEV
Not applicable

In the check itself there is no Customer:Job column? If t...

In the check itself there is no Customer:Job column? If that is the case then "Accounts Payable" will not work because you have to have an association with that account such as a vendor. My QuickBooks version will not cut a check unless there is an Vendor name.

Ok, just thought of something, how about creating a bill from Company A using the "Accounts Payble" and under "Customer:Job" enter in the Vendor. Can you do that with your version? Then simply pay the bill.
Established Community Backer ***

"In the check itself there is no Customer:Job column". It...

"In the check itself there is no Customer:Job column". It says you use Plus, so you have to go to Settings/Expenses and switch on "Track expenses and items by customer"
Established Community Backer ***

It isn't AP; it is a different type of Liability. It is D...

It isn't AP; it is a different type of Liability. It is Debt between the companies, not between a company and a supplier.

"Set up "Other Liability Account" (Loan to Company B)."

Other Asset = you paid for someone else's costs.

"Then write a check to the vendor from Company A using the (Loan to Company B) Account.."

Yes.

"Next write a check to Company A from Company B,"

Company A already paid the supplier. Now, Company B needs to repay Company A:

Company B enters a Bill for the expense and also a vendor Credit, posting on the expenses tab to an Other Liability account for "owed To Company A."

Company B pays down the debt to Company A by paying out against that liability; Company A has a Deposit against the Other Asset loan account.

You won't use AP between A and B at all.

Not applicable

I ended up paying the bill out of Company A and using the...

I ended up paying the bill out of Company A and using the account Loan to Company B.  Then in Company B I did a journal entry debiting Loan from Company A and Crediting the proper liability account (insurance).  I then wrote a check from Company B to Company A using the account Loan from Company A.  In Company A I deposited it using Loan to Company B account.
Established Community Backer ***

"It isn't AP; it is a different type of Liability. It is...

"It isn't AP; it is a different type of Liability. It is Debt between the companies, not between a company and a supplier." Not correct. The poster says"the bill is for Company B."
Established Community Backer ***

"Then in Company B I did a journal entry debiting Loan fr...

"Then in Company B I did a journal entry debiting Loan from Company A and Crediting the proper liability account (insurance)." This is the wrong JE. It s/be debit the expense, credit the liability to co A.
Community Explorer **

Re: Paying an invoice out of one company that is for a different company owned by the same owner, What entry is needed?

Do I have to close month before journal entry to send money over to other company?

 

Community Explorer **

Re: Honestly, there is so much data going so many different d...

I get the idea of what to do..... I am asking if I do the journal entry now or after I close month?

 

Community Explorer **

Re: "Then in Company B I did a journal entry debiting Loan fr...

company A paid all invoice,......some of the invoice was for company B.

I want to know DO I HAVE TO C LOSE MONTH OF FEBRUARY FIRST BEFORE I MAKE ThIS

transaction between companies? Can some one send me correct steps please. I understand the accounting. Just trying to do right in quick books. I have version 2017qb deskto. Thank you all for help 

 

 

 

Established Community Backer ***

Re: Honestly, there is so much data going so many different d...


@Janice1 wrote:

I get the idea of what to do..... I am asking if I do the journal entry now or after I close month?

 


You can do whatever you want after you "close the month" in QB.  Nothing is posted when you check the Close box.  All that happens is that either a warning will be given or a password will be required, to save a transaction dated before the close date.  It's just a precaution. Every time you run a P&L the profit is recalculated regardless of close date

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