LLC Accounting Questions for New LLC Owners

[Monica Kovalsky]

Hi everyone!

My husband @Kevin Kovalsky and I have been in the process of setting up a business structure for our rental properties where each property is in its own LLC and then all the individual building LLC's are owned by a parent LLC.

The purpose of the LLC's are for asset protection but from what I understand, it can all be for naught if you screw up the accounting and since we are brand new to this we have a few questions and I'm not even sure who to ask! Would you mind pointing us in the right direction? Are these questions for a lawyer, tax accountant or some other resource? Does anyone know these answers?

1. How do we pull money out of the LLC to put toward a down payment of another building?
2. How do we pay ourselves from the LLC's?
3. How do we put money into an LLC to fund a project if there is not enough there already to cover it (i.e. new roof)?
4. Does it make sense to have a bank account for our parent LLC? What would you use this account for?

Thanks so much!

Monica

[Sean Morrison]

Disclaimer: I am an attorney, but I am not your attorney. This is not legal advice, just friendly information.

On that final point, it's best practice to have a separate bank account for each LLC, including the parent LLC. In a multi-layered structure, the accounting needs to follow it. For example, 123 Main St LLC has a profit, which is withdrawn as an owner draw going to Parent LLC. Now Parent LLC has cash in the account, which is withdrawn as an owner draw going to the owner. That's two steps to take move that money from the property to the owner. Skipping the Parent LLC suggests to courts that it is not operating as a business.