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Viani
Level 2

Single member LLC taxed as S Corp

Hi,

I just changed from a sole proprietorship to single member LLC taxed as S Corp. How do record these (what journal entries?):

1. Money I take to pay for myself

2. Income tax payment

3. Estimated income tax 

4. Money reimbursement to myself when I used personal credit card for business expense / inventory (not often but it happens). 

 

Thank you

Solved
Best answer March 11, 2022

Best Answers
Rustler
Level 15

Single member LLC taxed as S Corp

1. You not longer can do that, unless you book it as a loan your yourself, there is no equity drawing in an S-corporation. You can take periodic distributions, but be careful, all shareholders must be paid the same and if a distribution drives your shareholder value below zero it will be subject to income tax.

 

2. An income tax payment is a personal thing, it does not belong in the business books. An S-corp is a pass through entity and does not pay corporate taxes to the IRS

 

3. Estimated income tax payments are also a personal thing and should not be in the business books

 

4. Money you use for the business that is personal, is a loan to the business, and must be paid back.

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2 Comments 2
Rustler
Level 15

Single member LLC taxed as S Corp

1. You not longer can do that, unless you book it as a loan your yourself, there is no equity drawing in an S-corporation. You can take periodic distributions, but be careful, all shareholders must be paid the same and if a distribution drives your shareholder value below zero it will be subject to income tax.

 

2. An income tax payment is a personal thing, it does not belong in the business books. An S-corp is a pass through entity and does not pay corporate taxes to the IRS

 

3. Estimated income tax payments are also a personal thing and should not be in the business books

 

4. Money you use for the business that is personal, is a loan to the business, and must be paid back.

Rainflurry
Level 10

Single member LLC taxed as S Corp

@Viani 

 

In regard to #4, you can treat it like a loan but you can also record it as an owner's equity contribution or simply reimburse yourself.

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