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Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1304
Experience:  MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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What is the best way to book transactions a personal makes

Resolved Question:

What is the best way to book transactions a personal makes from their personal account on behalf of a 2-member LLC? For example...an attorney bill. What is the entry on the personal books and the entry on the LLC's books?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
Hello lharry,

Are you saying that you paid an attorney out of your own personal checking account but the legal fees really belonged to the LLC?

Is the LLC now going to reimburse you for the fees paid?



Edited by Merlo on 10/1/2009 at 6:55 PM EST
Customer: replied 7 years ago.
Yes, my partner and I both paid for business expenses personally until the business bank account was set up. Do I book these as additional paid in capital, or due from the business and a corresponding entry on the business ledger as due to officer? Not sure what, if any, tax implications there will be.
Customer: replied 7 years ago.
Sorry, didn't see the second question. No, the LLC won't reimburse in this calendar year as the income isn't sufficient to do so yet.
Expert:  Merlo replied 7 years ago.
Thank you for the information. I will put your question on the board for someone to help you with.
Customer: replied 7 years ago.
ok.
Expert:  Mark D replied 7 years ago.
Customer

The journal entry would be a debit to the legal expense (although it may need to be capitalized and amortized depending on the nature of services) and a credit to the member equity account of the member that paid it.

On the personal books, you would debit your LLC investment account and credit your cash.

Please let me know if you have further questions.

Regards,

Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1304
Experience: MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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