Retained earnings

Sparky4214Sparky4214 subscriber Posts: 1
I currently own an LLC partnership and have 90% ownership. We have been in business for 3.5 years and for 2011 my share of the profits was around 23,000. For some reason my accounting software shows the amount in a negative, is this correct? Can I access this money since I have already paid taxes on it and if so, under what accounting I.D. should I remove it under?

Comments

  • yourekiddingrightyourekiddingright subscriber Posts: 0
    Above advice is exactly why when you post to this type of forum, you take the adviuce with a grain of salt.
    While you are correct that RE is a credit (many accounting programs will show debits as positive numbers and credits with minus signs), the advice re: LLC issues is off the mark.
    All profits from the LLC are allocated to the members as ordinary income and require the members to pay self employmnet taxes on the allocated profits. You do not pay "salaries" to members of an LLC (unless the LLC has elected to be treated as a Sub S Corp or taxed like a C Corp.).
    The second thing is that unles you elect an S Corp or C Corp tax treatment, there is no such thing as paying dividends in an LLC. When you receive money from the LLC is is usually classified as a distribution and usually with no tax effect (unless of course the member has no tax basis in the LLC, that is for anohter post). the entry that is made would be to debit the members Capital Account and Credit Cash for the amont of the distribution.
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