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Thread: Single Member LLC Start up Costs Tax Questions

  1. #1

    Default Single Member LLC Start up Costs Tax Questions

    Hi guys,

    I'm struggling to properly record in quickbooks. Over the last few weeks I've been using my personal bank accounts to fund purchases for the LLC. I'm a single member LLC.

    With that being said, I struggle because should I be recording the costs as equity or an expense? When I record as an equity contribution it shows that my business doesn't have any expenses.. when in reality I'm just purchasing the product for the business .. without being reimbursed.

    Since I'm a single member LLC, come tax time I'll want to deduct the expenses rather than have 'equity' which I don't believe is tax deductible.

    Thanks for the help! How should I go about this?

  2. #2
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    I would think it depends a little on what those purchases are. If it is something like ink for the printer it is an expense. If it is something like items that you are putting in inventory to resell it is not an expense but rather a purchase.

    It would be cleaner to transfer money into your business account and pay for them with a business check. If you are basically a new start up it probably won't get you into any serious problems but commingling the personal account with the business account could be considered as piercing the corporate shield which negates many of the protections of having an LLC. That leaves you more vulnerable.
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  3. #3

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    Quote Originally Posted by turboguy View Post
    I would think it depends a little on what those purchases are. If it is something like ink for the printer it is an expense. If it is something like items that you are putting in inventory to resell it is not an expense but rather a purchase.

    It would be cleaner to transfer money into your business account and pay for them with a business check. If you are basically a new start up it probably won't get you into any serious problems but commingling the personal account with the business account could be considered as piercing the corporate shield which negates many of the protections of having an LLC. That leaves you more vulnerable.

    I think you have a good point. We're in the process of setting up bank accounts and moving everything directly over.. but currently we're not profitable just yet. I'm using my own personal funds.

  4. #4
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    What type of business? I have the same issues but when it comes to taxes, I file business and does not matter how it is spent because all my businesses are virtual. I purchase supplies which is minimal.

    Also when you grow larger business, it will be easier to keep one from the other account.

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