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March 2, 2024
Question

Should I categorize my initial investment in the company as Owners Initial Investment , or Owners Investment ? Should I categorize as partners loan to company ?

  • March 2, 2024
  • 1 reply
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Should I separate the two investments  , Initial and ongoing investments ?

1 reply

March 24, 2024

Accounting entries must begin with entity type, you seem to be mixing up these 3 entity types:

- Owners = Sole Proprietor

- Partners = LLC/Partnership

- Shareholders = Corporation

 

Regardless of which of the above you are, you must choose to file taxes as one of these:

- Sole Proprietor

- Partnership

- S Corporation

- C Corporation

 

This defines how accounting entries must be done. For example, many LLC's file taxes as an S-Corp.

In that case accounting must follow rules for S-Corp, then owners are Shareholders and Employees.

 

Investment is company is different than a loan (which is paid back). One is Equity and other is Liability.

 

I have never seen a need to separate initial investment from later contributions, but see QB does that,

so maybe there is a reason.  Never seen split on any other accounting system.