In January we formed an LLC Partnership with 3 people to form a janitorial service. One of the partners already had contracts in place and was using his personal bank account (PBA #1) to receive payments and purchase supplies. He was not using any accounting software. Towards the end of January, we opened a new business checking account (NBA#2). I created 3 separate bank accounts in QB Online so all income and expenses would reflect everything starting January 1st. An additional account (NBA#3) was opened for unexpected expenditures.
Separate Vendor accounts were created for each partner so that reimbursements and wages could be paid using NBA#2 once it was viable for business use and NBA#1 would be no longer needed. I was using this method until I discovered partners do not receive reimbursements. These expenses should go through the Equity Account for Partner Contributions and Disbursements. After watching a video online, I tried correcting my earlier entries by going into the original expense, reclassifying it as “Partner Contribution” with the minus sign on the bottom line and saving. However, I don’t see any of the earlier reimbursement money to the partner showing up on my books or bank statement as their receiving money (or matching up). Also, I don’t know if my profit and/or loss under Expenses is correct. What was the best way to make this correction and starting forward how should I reimburse my partners and so that QB Online is correct? I still have outstanding reimbursements for January and the early part of February to enter.
Also, 2 of the partners require income from the business for living expenses. I listed them as Vendors and categorized the Expense as “Salaries & Wages”. I recently discovered, partners can’t receive salary, only “draws”. Partners should only take “Draws” or “Guaranteed Income” for living wages. I don’t know how to move previous “wages” to “Draws” or “Guaranteed Income” and if that should be a subcategory of Partnership Contributions or Partnership Distributions. These also need to be corrected. Can you please help on this one also?
I’ve spent many hours trying to find a solution on the internet and in forums but keep getting confused. In addition, I’m still in the process of reconciling PBA#1 bank account and don’t want to move forward until I’m on the right track.
Please help.
