Intercompany Transactions
Hello,
I am working on 4 separate LLCs (A, B, C, & D) that share the same common owner. They are all in the same trade with their own sets of books, bank accounts, credit cards, etc. Historically at the end of the year the owner would cut checks from B, C, and D for expenses that were paid by A. These expenses are normally insurance and rent (all entities are listed on policies/leases). The reason for the end of the year is that the amount due is determined by percentage of revenue. Owner would then issue 1099s for these money moves. B,C,D would record the expense and A would record the revenue.
From a matching standpoint this makes sense - but I am wondering if someone has a better suggestion on how to handle this. Reading I see that asset/liability accounts should be established for the money moves - but is it wrong to just have A issue an invoice to each entity and have them pay? Thank you for the help and guidance.
