Personal Accounting Question..

[craigster59]

I have an LLC that I use for consulting and management. In January of this year during the writers strike, with no $$ coming in but still going out, I moved $15k from my personal account to my business account as a "cushion" till the strike was over.

Well, now that money is coming back in, I want to move the $15k back into my personal account, but how do I do this without making it look like personal income? I didn't draft any loan paper or payment schedule, what's the best and easiest way to move it without tax liability? Thanks, Craig

Edit: I use Quickbooks, if that helps.

[Don Plumley]

Is it a single member LLC and you did not select the corporate tax election?

First, you are commingling personal and "corporate" assets. Danger Will Robinson. The purpose of a corporate entity is to shield your personal assets from liability. If you are ever to be sued, the first thing the plaintiff looks for is just this - the transfer of personal assets into and out of the corporation (without documentation).

Seems to me (and you should wait until a tax guy chimes in) you could draft a simple promissory note from the LLC to you and date it to when you made the transfer. Charge and collect market interest rates to make it a genuine loan.

All this being said, if it is a single member LLC and with the funds in and out of the company within the fiscal year (right?), it won't show up on your books at all other than as offsetting entries, so it's really no big deal.

Does that make sense?

[Porsche_monkey]

Originally Posted by Don Plumley

Seems to me (and you should wait until a tax guy chimes in) you could draft a simple promissory note from the LLC to you and date it to when you made the transfer. Charge and collect market interest rates to make it a genuine loan.

Uh huh.

[berettafan]

Over $10k you are supposed to have a signed note. In practice this doesn't matter (and isn't even the issue you are asking about; the note issue is an interest thing).

Just move the money back and be done. In quickbooks you show the deposit as a loan from you and code the check/transfer back as a reduction in that loan. Honestly not a big deal.

What MAY be a big deal however is being an LLC and paying SE tax on your entire net income. I'd certainly defer to a CPA who has experience in the entertainment industry but it's POSSIBLE that you could be an S corp and only pay SE tax on the salary you pay yourself (which, to be effective would be less than the total draws you take in a year).

IRS may frown on this because you personally are generating all the income but it's worth a call to a LOCAL to you CPA that handles other writers. In fact i wouldn't be surprised if IRS has already issued guidance on this concept for writers.

Having said that however you do want to be weary of PSC rules but a competent industry experienced CPA will know the score on that as well.

[craigster59]

Thanks for the replies. It's a non S corp partnership LLC, so I think a promissary note is probably in order and a quick payment schedule. I really need to be more diligent in my personal/business transactions so commingling doesn't come into play again. It seemed to be an easy cashflow resolution at the time, even though in the back of my mind I knew I should be talking with an accountant. Thanks again.

[911Rob]

bla, bla, bla.
Simply show the deposit as a share holders loan, then pay it back to yourself.
Jeesh!

Hard to find a good accountant that doesn't think like the gubmint wants them to.
It's your money and this sort of thing happens all the time in bizzyness.

Glad you're back at work.

[berettafan]

Rob being a SMLLC there are no 'shareholders'. there isn't even a balance sheet reported to IRS so no equity section/basis issues. hence the non-issue of the 'loan'.