Owner Contribution or Owner Draw account question

[Account Closed]

Thanks for taking the time to review in advance. 

I just wanted to get some clarity on proper protocol. On a partnership LLC, when you do a distribution , are you offsetting account for your owner contribution , ( so what they have into it is reduced? ) . Or do you do a distribution ?

Im not sure if there is a net effect of difference for accounting purposes. But moreso if there is a different level of contributions and you want to reduce one partners contribution before you start distributing equally . 

Also if there are multiple partners, do you track the owner distribution accounts differently? Like each person has their own name/account so you can track individual distributions as opposed to collective distributions? 

Thank you !

[Lance Lvovsky]

I always recommend clients have separate partners' capital accounts on the balance sheet. Every partner in an LLC taxed as a partnership should be tracking capital accounts on the financials. In addition, tax basis capital along with partners' outside basis should be tracked annually (generally done by the CPA handling the partnership tax returns).