Starting an LLC and a Joint Bank account question

You are assuming you will have a profit???

Handle just like you worked for a company that offers direct deposit. Whatever accounting software you are using should be able to print a pay stub for your records. My advice is to have a record of it on your business computer as well as a paper copy for you personally.

 

Set up your LLC and get that going. In Iowa, you can do that via fax! That way this joint account stuff won't muddy any waters.
Regarding the transfer, you can probably do it now as there's not a business, but how can you pay yourselves without any income yet?
When the LLC is setup, you'll want to write checks and keep a VERY DEFINED LINE between you guys and the business. Wouldn't hurt to consult a CPA.

 

As long as you can clearly document your transactions, it should work for the IRS. I agree to not just depend on the bank records, though. It'll be best to keep your own copies, too.

You might want to look at [post=1534166]this post, for more about LLC's[/post], too.

 

I have an LLC and a business bank account as well. I use QuickBooks for accounting and write checks or do the credit card entries for all transactions so I have a record of what was paid. If you use your bank accounts as you have said, you can show the transactions with bank statements but you can't show what they were for.

Let's assume you only take your 30% each pay period and that it is your "payroll". What happens if you have to reimburse yourself for a major expense you covered. Without having a transaction accounting process in place, you really don't have a way to differentiate the payroll from the expense reimbursement and both are taxed differently. If you have to demonstrate it to the IRS someday, you'll be pressed to show why it was an expense reimbursement versus an additional owner's draw.

Chances are, you'll never have to show an audit trail so you're system should work fine. Just keep in mind if you are going to do transfers for things other than payroll.

 

The LLC is a separate entity and must have a separate account. If the funds flow direct to your joint account, you are are required to show the distribution in full.

 

Roadmedic's right. The main purpose of an LLC or a corp is asset protection. If you comingle (mix) the entity's funds with your own, a creditor could "pierce the veil" of your entity, and you would lose any asset protection the structure gives you.

Once you get used to it, it's not that hard. It doesn't mean you can't carry company money and your own in the same pocket. You just have to keep track of what's what, either on paper or computer.

You can even pay for company expenses with your personal money, either from your pocket, bank account, or bank card, as long as you get reimbursed. When the company pays for your personal expenses, though, that's when you've crossed the line. Instead, just take an advance and pay them personally. It's really that simple.