taking money from an s-corp to an disregarded entity llc
3 Replies
Char Bacheh
posted almost 2 years ago
i made around 8k on my s-corp and i took that money out and put it into my llc how would i have to report it?
Ashish Acharya
Accountant from Atlanta, GA
replied almost 2 years ago
Originally posted by @Char Bacheh :
i made around 8k on my s-corp and i took that money out and put it into my llc how would i have to report it?
Generally,
Distribution to yourself on your Corp’s books. Decrease cash, increase your distribution.
Contribution from you on your LLC's books. Increase cash, increase your capital account.
Char Bacheh
replied almost 2 years ago
is there a way to i can put it on sch k-1 and not pay taxes?
Eamonn McElroy
Accountant from Atlanta, GA
replied almost 2 years ago
If you deduct it on your S Corp return (1120S), wouldn't logic then dictate that it would be income on your Schedule C/E?
It's zero sum, maybe worse if it ends up on the Schedule C subject to 100% self-employment taxes.
What @Ashish Acharya described is generally the way to go about it.
If you have $8k net taxable income in your S Corp there's a very strong argument to be made that you shouldn't be an S Corp yet for tax purposes. Are you running payroll and fairly compensating all owner-employees for their time as required?