Just looking for a definition - I have a small business and one of the LLC members just opened up an account with $100 to start us off. Is this considered opening balance equity?
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Just looking for a definition - I have a small business and one of the LLC members just opened up an account with $100 to start us off. Is this considered opening balance equity?
It could be considered so but I expect that you will have a share account for that personQuote:
Originally Posted by kimberleycurry
Opening balance equity is where you have an existing business with earnings etc from prior years and you are starting a new set of books
Thank you for your response, that helps and makes good sense. I have 4 members of an LLC and the next thing I'm trying to figure out (they've been open since November and haven't coded any of their expenses/income etc; it's been great fun ha ha).
A couple of the members have made "loans" to the company to keep it afloat until we start bringing in a steady income from sales. I've been reading about dealing with accounting within an LLC and am not sure if I build an income account of "loans" with sub accounts for each member? And then someday when they are paid back, it'll just show as a debit to this account to "payback" their loans - just want to know if this makes sense to anyone?
Lastly, I am paying the members out "loans" each month as they are not being paid out of payroll and currently pay them as vendors/consultants - I know they are not employees, but is this the correct way to pay them? Or perhaps I should start paying them out of the "Loan" income account and as opposed to them bringing money it, it will be going out to them to repay? Hmm, that doesn't make sense to even me I don't believe - but maybe? Thanks so much for anyone that's willing to take the time to read through my "goings on" here... :)
You will have a Liability Loans with a sub account for each member.
These payments to members could be treated as consultants and if you are not paying them in cash this would add to their loan balance.
I don't understand your reference to a loan income account. A loan is not income. And Loan Income would come from loans you have made for which you charge interest
From your questions I assume you are using a proprietary software such as Quickbooks to record your transactions. Such software usually has accounts set up as a template which you can add to or amend to suit your circumstance
Thank you! The "Loan" Income account is something I've been asked to set up for the money that some of the partners are putting into the company just to keep the business afloat until we have a steady sales income, so they have been making loans to the company that will need to be paid back to the LLC members individually.
Yes, I'm using Quickbooks Online so I'll check into the templates to see if there's something to help me with this!
Once again it is not income but a liability.Quote:
Originally Posted by kimberleycurry
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