I own two small businesses in their entirety. One is a Sole Proprietorship and the other is an LLC. I pay income taxes for both businesses on a 1040 Schedule C.
During calendar year 2007, I purchased goods and services for the LLC and paid for some of those expenses out of my Sole Proprietorship checking account.
I now understand that, in order to maintain the liability protection of my LLC, I should not have mixed funding sources in this manner. However, I am wondering whether I can do something now to undo that mistake. Which of the following would be the best course of action:
A) Record these expenses in my Sole Proprietorship accounting ledger. Then "sell" these goods and services from my Sole Proprietorship to my LLC and transfer funds from one checking account to the other, accordingly.
B) Transfer the appropriate funds from my LLC checking account to my Sole Proprietorship checking account, and record the expenses in my LLC accounting ledger only.
C) Don't transfer any funds between checking accounts. Enter the expenses in my LLC accounting ledger and record the dollar amount of the expenses as a capital investment in the LLC.
During calendar year 2007, I purchased goods and services for the LLC and paid for some of those expenses out of my Sole Proprietorship checking account.
I now understand that, in order to maintain the liability protection of my LLC, I should not have mixed funding sources in this manner. However, I am wondering whether I can do something now to undo that mistake. Which of the following would be the best course of action:
A) Record these expenses in my Sole Proprietorship accounting ledger. Then "sell" these goods and services from my Sole Proprietorship to my LLC and transfer funds from one checking account to the other, accordingly.
B) Transfer the appropriate funds from my LLC checking account to my Sole Proprietorship checking account, and record the expenses in my LLC accounting ledger only.
C) Don't transfer any funds between checking accounts. Enter the expenses in my LLC accounting ledger and record the dollar amount of the expenses as a capital investment in the LLC.
