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    Small Business

    Question

    How do I deposit/withdraw money into/from a new LLC account properly?
    I'm wanting to create an LLC, but the bookkeeping is giving me many questions. I know that the accounting must be done "properly" to maintain the protection of the LLC, so I need to ask what appears to be a very basic question: If I create an LLC and open a checking account for the LLC, how do I place my seed money into the account while maintaining the "division" of my personal and business assets? I suppose the flip question applies as well: how do I properly take money out of the LLC account so I can spend it on my own life, since the purpose of owning the business is to make money for me to enjoy? Thanks!
    a few seconds ago 1 Answer

    Best Answer

    Chosen by Asker
    The answer depends on what type of LLC you are. If you are a simple LLC you are probably set up as LLC type "disregard entity". If that is the case you would use an equity account "Owner's Draw" to take money out of the business. You can then transfer money from the LLC account to your personal account and debit Owner's Draw. If you want to contribute seed money you can also just run it through Owner's Draw or if you really want you could set up another equity account called Owner's contributions. The key is you need to use an equity account so it will not affect the income or expenses of the business. It is very important that you know which type of LLC you are. On a W-9 form you will see LLC with the options D=Disregard entity C= Corporation P= Partnership. Many people just think that once you are an LLC that is all but there are different forms of the LLC. If you are anything other than disregard entity you are required to run a payroll to pay yourself and then you can draw out additional funds later through an owners distribution. You must pay yourself a "reasonable salary" for you industry according to the IRS. Please let me know if you have additional questions.
    a few seconds ago

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