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How do I transfer revenue into LLC?

I am a member in a multimember LLC (taxed as partnership). If business income is paid directly to me (check payable in my name), but I want that income to show as income within the LLC (to be used for operating expenses, distributed among members, etc.), how do I do that? Is there a form I need to file, or is it sufficient to deposit that money in the LLC's accounts?

Update:

Clarification: Here's what I'm looking at. There is money that will be paid to me, but I will use to run the business. I know that the LLC allows additional contributions (beyond the initial contributions by a member). I just don't know what I need to do to show these properly, so that money becomes part of the LLC calculations. Otherwise, the other member shows a HUGE loss, and I show a lot of income, when in fact, after my additional contributions, the LLC will show a modest profit that is shared between the members.

This is not about me trying to skirt taxes - it's about getting the taxes (profit/loss filing) to be accurate. I won't go into the reason for the payments being made to me - it's a regulatory thing that requires specific licensing for the one directly receiving the payments. Suffice it to say that the payments, for now, must be made to me, but we need to use that money to fund the LLC's operations (office, staff, utilities, etc.).

3 Answers

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  • tro
    Lv 7
    9 years ago

    if your receipts for the work performed is paid to you it appears the LLC is not the performing business

    you are, as a sole proprietor

    if you transferred the money to the LLC it certainly isn't income to the LLC, it would be your additional contribution

    contributions are not income

  • Anonymous
    9 years ago

    If you want the income under the LLC the checks need to be made payable to the LLC.

    No form just the checks need to be payable to the LLC and if the checks are payable to you, you need to report the income.

  • 9 years ago

    Check with your tax professional who understands your situation and will know how to book the revenue.

    You can't just "transfer revenue" from one party to another because you "want that income to show as income within the LLC." If people could get away with that, nobody would pay tax anymore.

    If you received compensation for services, that income is yours. You can't book it as revenue for the LLC.

    If you received payment for the LLC, but it was mistakenly written out to you, that's another story.

    Check with your tax professional to see how the rules on constructive receipt and related-party rules affect your tax situation. Your tax professional will be able to report it properly and keep you out of a huge tax mess.

    >>>I know you're not trying to evade taxes. Your problem is intermingling, which is common with business entities formed without expert tax guidance. All the issues you've laid out relate to legal ownership of revenue and income. You don't understand (or haven't embraced) the fundamental relationship between a business entity and its owners. You created a next-door neighbor when you created the LLC, with all the same legal rights to revenue and property that you have. If you earn money for services, for example, you can't just "transfer" that revenue to your next-door neighbor. You have to report the income and pay taxes on it, then you can use the after-tax money. Again, all your questions relate to ownership of income. It's common for people to intermingle funds because they don't understand the separation that must occur for the business entity to achieve what it's supposed to.

    You can't just shift money from one place to another because you "need to use that money to fund", etc.

    You earned the money as an individual. You can't just say "I didn't earn it. I'm going to say my next-door neighbor earned it, because that will help us achieve our objectives. What form do I fill out to make this happen?"

    You must, legally, treat the LLC as having all the rights of a person. If they earn money, they have to include that money on their tax return, and vice versa. The separation is the biggest problem for people with business entities who don't have expert guidance. It's a difficult concept to put on your manager's hat, write out a check to yourself on payday, then move around to the other side of the desk, put on your individual hat, and take the paycheck. It's the same issue as people not understanding or thinking it's ridiculous for a one-person corporation to be required to hold board meetings. If you understand the concept, it won't seem ridiculous anymore.

    It's likely that a knowlegeable tax expert would advise you to make a loan to the LLC. The LLC then has money to conduct operations, you don't mess with the distributive share, it's not revenue to the LLC, and repayments are not revenue to you. However, if you don't structure the transactions properly, you'll inadvertently intermingle funds, and you could end up making all the money transfers taxable when they could have been nontaxable.

    Get assistance from a tax expert. I get cranky about this stuff because I see so many catastrophes in my office from people getting into legal business entities when they don't understand what they're doing. Then when the inevitable tax stink bomb drops, they don't know what hit them. You created a next-door neighbor, but you've never met him and don't understand his behavior. Don't be surprised when he paints his house hot pink and starts holding jackhammer parties at night.

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