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L
Lhack
December 13, 2022
Question

Payments

  • December 13, 2022
  • 1 reply
  • 0 views

QUESTION 1

Owner has two companies, Company A and Company B, both have their own checking account.

Owner transfers money from A to B but  Company A doesn't have a Bill for the exact amount but has several open Bills that it can be applied to.  How do you record this in QB's Enterprise?

 

QUESTION 2

Company A paid a Bill on behalf of Company B.  Company A wants to take that money they paid and deduct it from a Bill received by Company B.  What accounts would you use and how would you record the Payment for the other company?  And, what accounts would you use and how would you record putting that Payment towards a Bill from Company B?

1 reply

P
Pete_Mc
December 14, 2022

Question 1:  If A and B are truly different companies with their own EIN, then there is no "Transferring" money between A & B.  A is either paying bills or giving B a loan.  And if A has multiple open invoices with B, then when you go to Receive Payment, you just apply what you want from the check to each of the open invoices.  (A cannot pay other companies invoices if that is what you meant by open invoices._)

 

Question 2: You can just deduct it from a payment, but probably a pain to show it and remember what was going on years from now if it comes up somehow. (Audit, etc.).  Might be better to show the money as a loan and then apply the Liability to the invoice. 

 

But for both of the above you should check with your CPA.  They may have a preferred way based on how they are filing the YE taxes.

 

L
LhackAuthor
December 14, 2022

Hi Pete,

Thank you for your answer but it's a bit more complicated than that.  First, we don't have a CPA and second the owner can transfer money to and from his companies if money is owed.  If you'd like to understand the situation better and could possibly help I'd be happy to send you my email address.

P
Pete_Mc
December 14, 2022

I'm not an Accountant, but in the vast majority of the cases you can not just give money from one company to another.  It usually has to show up on the books as a Loan/Liability.  Basically the same thing, but different from a tax standpoint. 

 

So are these companies LLCs with a single owner?  If so, I *think* the owner can move the money around if they file a Schedule C for the business income.  But if they are Sub-S or the taxes are done in a way the owner doesn't file a Sched C (again, I'm NOT and Accountant), then you need to show the money transfer as a Loan.

 

Other option, but again no clue on their specific tax implications, is that they can take an Owner Distribution from one and then give an Owner Contribution to the other.

 

And I'd suggest looking into a CPA if only to get these things set up.  They often can save you quite a bit on your taxes knowing what you can deduct.  And certainly can save you a lot in penalties if you happen to be the random Tax ID that gets pulled for an audit or you happen to set off some red flags in the IRS computer and you have moved the money incorrectly.

 

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