LLC structure advice?

I think you're getting too nitpicky (for lack of a better word) and that's probably what has your bookkeeper and accountant in a state of confusion.

I've done books for several partnerships. In each there were always two main Equity accounts: Owner/Partner Equity and Owner/Partner Draws. Under each of those accounts was a subaccount with the partner's name.

Since it sounds like you'll be dealing alot in week-to-week proceeds at first with no fixed draw amounts then I'd recommend you pay your bills (common expenses) and then issue draws rather than trying to deduct common expenses from a draw.

As for each partner paying his/her own insurance then you can take those, as line expenses, out of the draw check. Put them in an Other Current Liability Account for W. Comp and for Health. You pay the insurance provider, using the correct Other Current Liability Account as the expense, to bring it back down to zero.

Your accountant will still likely need to tweak your books at tax prep time. There are benefits and drawbacks to making your system & chart of accounts a minutely-detailed one. If you really like your accountant then stick with that person but if you're not terribly attached then you may want to find someone who is better versed in LLC structures. Whether or not they support QB is really irrelevant unless you need your accountant to act as tech support.

I'm willing to bet that the more you learn about maintaining the books of a partnership (which is what a LLC is) the more informed your accountant will appear.

There are many instances where a group of people get together and form a business that in essence are separate sole propritorships. When income and loss allocations are made on a job by job basis needless problems (disputes) will almost certainly result. Try to live by the KISS principle.

All accounting programs can handle this, can't think of a single one that can't.

Capital accounts are by defination equity accounts not liability accounts.

Thanks Allan,

Just for the record, both the accountant and bookkeeper are new to partnerships... I'm not bashing them, it is true. Also, I would LOVE to KISS this, but the differences in income and time invested in each project can be pretty extreme.

I have one question about your response that has been most confusing to me...

This thread from the quicken group says:

"a partner's capital account is a liability " "give each partner a separate capital account (use Liability account type)."

Either way, assuming equity capital accounts are the way to go, I'm struggling with the right way to get monies into the account.

You gave some good, but not througly explained advice in this post

You advised that journal entries from income to capital accounts was "Very bad move. Not recommended". Instead you advised that the funds come out of retained earnings at year end. Should I not expect QB to help me track the day-to-day questions of how much each partner has available to draw from?

If the allocations are that complicated then it may be advisable to make sure the method is in writing and second perform the actual calculations outside of QB. At the end of the year when the partners agree to the final total P&L allocation book it as a single journal entry.

Quite simple really. When you add a Capital Account to your chart of accounts you should specify the type as "Equity".

"a partner's capital account is a liability ">

That's because Quicken doesn't have equity account capability (except for a catchall "Equity" which is the net income of the enterprise). So you need to kludge using liability accounts in Quicken. Don't need to do that in QuickBooks. You can do it right.