Guaranteed Payments to Owners - Partneship, 3 member LLC

[Sebastian K.]

Hi,

I have questions in regards to guaranteed payments for a multimember LLC. If the cash is simply not there to payout the guaranteed payments, do I debit "member 1" guaranteed payment. (expense account) and credit "member 1" contribution account (equity). Basically stating, the company paid "member 1", but "member 1" immediately put money back into the company. I understand, that in this case the member would still be responsible to pay SE taxes quarterly.

Is there a better way to do this?

Thanks a bunch

Sebastian

[Freelancier]

I think you just don't do anything, don't take money out of any account, don't put it into any other account. Basically, you might be in violation of a separate agreement governing a loan or whatever, but that doesn't affect your accounting in this case. You're just not paying out the money at all, so nothing happens. Unless you're saying that the payout is converting to a loan at some interest rate, in which case, you'd set up the loan account and transfer the money into that.

[Tena]

If the company actually made the payment as indicated above, then credit cash, debit guarantee payments (expense). If the member then immediately put the money back into the company, then Debit Cash, credit Additional Paid In Capital - Member1 or their equity account, I prefer the additional paid in. If nothing was done, no payment was made, no money put back into the company, then do nothing unless there is a written obligation to make the guarantee payments to the member, if so, debit Expense, Credit Due to Member 1 (Liability) assuming the company is accrual basis, if cash basis, do nothing.

Hi,

I have questions in regards to guaranteed payments for a multimember LLC. If the cash is simply not there to payout the guaranteed payments, do I debit "member 1" guaranteed payment. (expense account) and credit "member 1" contribution account (equity). Basically stating, the company paid "member 1", but "member 1" immediately put money back into the company. I understand, that in this case the member would still be responsible to pay SE taxes quarterly.

Is there a better way to do this?

Thanks a bunch

Sebastian