How would I book this ?

gussiedup · ‎March 21, 2022

I am doing the books and records for a company - lets call them Company A. Company A has two partners. One of the partners also has another LLC - i"ll call that Company B. When the owner's were going to start Company A they originally thought they would just use the existing LLC, Company B - however since they are partners ultimately decided they should open Company A. Company B - the one owner's existing company bore a lot of the start up costs of Company A. The owner expensed those start up costs on the books of Company B. Now he wants a payable on the books of Company A to represent the amount of money his other business fronted for the start up costs. Eventually when Company A starts making money and the two owners start taking distributions the one owner will get paid out first these start up costs he fronted.

I am stuck on how to book this to the books of Company A given that the expenses aren't going to hit company A.

Rustler · ‎March 22, 2022

in the chart of accounts create a liability account named for the owner.
Create a cash type bank account called owners

enter the expense transactions in the owners cash account
finish with a deposit to the owners cash account using the owner liability account as the source account for the deposit

gussiedup · ‎March 22, 2022

I think the issue I am having is that the expense wouldn't be on the new companies books since the old company is taking that as an expense. Therefore booking that one expense transaction puts the expense on the current companies books right

gussiedup · ‎March 22, 2022

I think this would create an expense though. I am trying to avoid having an expense but having the liability account is what I need.

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How would I book this ?