Author Topic: Cash In/Out of our LLC  (Read 952 times)

Louisville

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Cash In/Out of our LLC
« on: September 26, 2018, 11:59:20 AM »
My wife and I bought an established business in April. Actually, the LLC is all in her name. We paid $150k: $30k out of pocket and took $120k loan for 3% from Bank of Dad. During the first month, we transferred over another $5k to the LLC’s bank account for a cash cushion.
So, we have $35k in what I call “owner equity” in the LLC. Correct me if I’m using the wrong term for this. Is there any risk in letting this be on the books of the LLC? Should we pay it back to ourselves ASAP? Or does it matter?
Any input welcome. Thanks.
« Last Edit: September 26, 2018, 12:27:51 PM by Louisville »

CareCPA

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Re: Cash In/Out of our LLC
« Reply #1 on: September 27, 2018, 08:43:25 AM »
Generally, you can contribute and distribute cash from the LLC at any point in time (subject to any restrictions in your Operating/Partnership Agreement). If you're pulling cash out, just make sure you have basis in the businesses.
It becomes more difficult if you elect to be taxed as an S Corp, but not substantially so if it's single owner.

There's no harm in leaving this on the books, and actually gives you basis to take losses if they occur.

jpdx

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Re: Cash In/Out of our LLC
« Reply #2 on: October 06, 2018, 12:12:17 AM »
I believe the term for transferring personal funds to the LLC is "capital contribution." This can be money or property. And when you transfer funds in the other direction it's known as a "distribution" or "member draw."


Coloradoskibum

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Re: Cash In/Out of our LLC
« Reply #3 on: November 13, 2018, 12:21:16 PM »
I believe the term for transferring personal funds to the LLC is "capital contribution." This can be money or property. And when you transfer funds in the other direction it's known as a "distribution" or "member draw."

Spot on!

dleavitt

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Re: Cash In/Out of our LLC
« Reply #4 on: November 14, 2018, 10:35:20 AM »
Preface: you really should be talking to your accountant, or engage a qualified accountant to get the complete answers for your specific situation.

How the purchase should be recorded will depend on what you actually bought.  Did you buy the membership units of and existing LLC, or did you buy the assets of the business through your own new LLC?

soccerluvof4

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Re: Cash In/Out of our LLC
« Reply #5 on: November 17, 2018, 03:48:44 AM »
Preface: you really should be talking to your accountant, or engage a qualified accountant to get the complete answers for your specific situation.

How the purchase should be recorded will depend on what you actually bought.  Did you buy the membership units of and existing LLC, or did you buy the assets of the business through your own new LLC?
I believe the term for transferring personal funds to the LLC is "capital contribution." This can be money or property. And when you transfer funds in the other direction it's known as a "distribution" or "member draw."

Spot on!




This^  I found over the years the two most important things in any business is having a good Accountant and a good Lawyer. Can be hard to find but will save you a lot of headaches.

Louisville

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Re: Cash In/Out of our LLC
« Reply #6 on: December 07, 2018, 10:02:35 AM »
Thanks all.
We bought the assets of the business through our own new LLC.
We do have an accountant, who tells us money can go in (capital contribution) and out (owner draw) of the company and it's never a taxable event.