Hi,
For the life of me I cannot figure out how to show loans I have made my LLC.
I deposited 11k in seed money in to my business checking account.
I also sold my business one of my cars for 5k.
I took at draw of 4k to partially repay myself and I don’t want this to show as income…
What do I do??
You should discuss this with your CPA. We would need to go over the LLC formation documents with you. The issue of the car alone is why you need to work with the CPA.
She just left; She is not familiar with this version of QB.
How do I show what I asked in QB?
http://community.intuit.com/posts/owers-loan-to-llc
See, even the accountants/bookkeepers over here in the QB forum are telling you the same thing.
Again, what is the point of this site if not to ask questions?
Again, I want to know what mouse clicks I needed to make.
And again, even on this forum you are trying to run me down.....
You must be a really bored.... And hatefull....
The purpose of the site is to have the ability to ask questions about Quickbooks issues. This isn't a Quickbooks issue, it is an accounting issue, and for the last time --------------------------- ask your accountant.
Let me try a bit more:
"For the life of me I cannot figure out how to show loans I have made my LLC. I deposited 11k in seed money in to my business checking account."
Under the tax rules and the LLC formation documents, this might not be a loan at all.
"I also sold my business one of my cars for 5k."
Under the tax rules and the LLC formation documents, this might not be a sale at all.
"I took at draw of 4k"
Under the tax rules and the LLC formation dolcuments, this might not be a draw at all.
"to partially repay myself"
Under the tax rules and the LLC formation documents, you might not be allowed to do this at all.
"and I don’t want this to show as income…"
Under the tax rules and the LLC formation documents, you have no control over whether "this" shows as income. Once you know how the accounting treatment of all this info needs to be handled, we can help you enter it into QB, and you learn whether any of it is, or is not, income, loan, or sale to the LLC.
"She just left; She is not familiar with this version of QB."
It has nothing to do with the version of QB. It has everything to do with the accounting treatment of these activities, under the tax rules and the LLC formation documents.
""What do I do??"
Ask your CPA.
If she isn't anwering because she "doesn't know this version of QB" then you need a different CPA. She should be able to write it down. It has nothing to do with QB.
It has everything to do with Accounting and Tax Rules.
Let me try to explain, if its not answer, then pl clarify me.
First create following accounts in the chart of accounts, steps: go to chart of account, select account>new>then
Deposit of 11 k in the business.
Go to banking tab on the top>make a deposit>and select Loan to shareholder under "from account" and fill this. (it will show as your loan instead of income)
Car to Business:
Make a general entry. Go to company>make general entry>select date>then select "this auto" (the account you set it up as fixed asset) and write 5,000 under Debit column (remember to use only fair market value of auto, the amount that you can get in the market). then select "owner contribution" under account in the next line; and write 5000 under credit column.
4k drawing from business:
When you draw this money, I assume you write a check to you if so: (I am not sure how you draw this). go to Write check window under banking and fill this, under account select "distribution to owner"
Second method: As said in all above posts, it is more accounting/tax quesiton and nothing to do with quickbooks. qbteahmt is a expert, he gave you good advice to talk to accountant. in the above post they don't answer the question directly, because we have to consider different factors while making these adjustment, and there can be some other consideration to involved before making above posting. For example, if you start your business with $16000 (11 K-cash, 5 k-car) then IRS wants more to equity then to loan, it depends on various situation. May be you can do 50/50; that is 50% as equity and 50% as loan, so instead of doing above you can make a general entry:
Cash 110000
Car 5000
Loan to shareholder 80000
owner contribution 80000
For distribution of 4k do the general entry out of your loan and equity both, so your loan balance is less or equal to contribtuion at the start of business.
i think this is ok that either one you select at this point is fine. Your tax accoountant will make adjustment as needed during filing of tax return.
If I could not clarify your answer-kept asking, if I do pl click solved, or thumbs up.
good luck.
Dede
WOW! Nice job, Dede! I've been trying to figure this out for a month and this is the first response I can actually understand. Thank you.
While all of us do appreciate mkhan's attempt to answer, I just want to address a couple of issues:
You won't see in a bookkeeping file both "Owner" activity and "shareholder" activity. It is one or the other. Either we have shareholders, or we have owners.
For a single-member LLC treated as a disregarded entity, there really is no Loan to/from owner.
"For distribution of 4k do the general entry out of your loan and equity both, so your loan balance is less or equal to contribtuion at the start of business. "
You can't just state to "do" this. This is either a repayment of a loan, or an equity draw of some sort. Or, it might need to be run as payroll; if this LLC is treated as an S-corp, there has to be wages before Equity distributions, if services are provided to the business. Or, for certain LLC payouts, this is a guaranteed payment, which is tracked as an Expense.
And whether or not this taking is reported as taxable income really has nothing to do with anything other than the tax and accounting rules that apply to the LLC.
This is why we proceed cautiously when responding to what are accounting and tax rule questions and not QB questions.
And the whole point of forming an LLC is to protect yourself and your personal life from the risks of the LLC. Anything you do to violate that separation defeats the purpose for forming the LLC in the first place.
Which is why Chuck has been told to get professional advice from someone who knows him, his LLC formation documents and legal status, and can dscuss with him what and how to do whatever it is he needs to do.
if so then just do the general entry:
Cash 110000
Car 5000
owner contributin 12000
owner distribution 4000
I assume it is disregarded entry. qbteachmt correct me if you think otherwise, thanks.
"I assume it is disregarded entry. qbteachmt correct me if you think otherwise, thanks. "
I've been pointing out there is not enough information to know, either way.
mkhan, you are doing fine; the rest of us were hesitant to reply and potentially mislead Chuck. We can't make assumptions and an internet forum is not the place Chuck should reveal all the personal and financial details required to discuss his issue. We want Chuck to be discrete even if he doesn't see it that way.
He posted a duplicate of this, in the Accountant's forum under Taxes for the ProSeries program and has gotten wonderful advice: to seek a professional to help him specifically. Taking general guidance from an Internet is not the best way to handle your business finances. Not when there are professionals freely giving direction, that this is in fact something to consult with a professional for the accounting (tax and entity type) rules.
Chuck doesn't seem to understand there might be good value in the free advice he is getting.
