How to report contributions to single-member LLC?

Forum|Forum|6 years ago
March 30, 2020
2 replies
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2019 was the first year my single-member LLC was in business. Business wasn't great so I made some contributions to the LLC from my personal money to keep things going. How do I report those contributions, if necessary, using TT Home & Business.

TurboTax Home & Biz Windows

ColeenD3

If you are filing a Schedule C as a disregarded entity, there is no provision for that. You and your company are the same to a certain degree. However, having said that, make sure to keep your business expenses separate from your personal.

Just make sure you do not show it as income.

Carl11_2

Employee

The IRS considers a single member LLC to be a disregarded entity. Therefore, the owner of the business can not make contributions to the business. Period. Income earned by the business is absolutely no different than income earned by you. It is exactly the same.

Contributions to a single-member LLC made by non-owners is reportable business income and is taxable income for the business subject to both ordinary income tax and the additional self-employment tax if the business has more than $400 of income from any and all sources in a tax year.

Expenses incurred before the business is officially "open for business" are start-up expenses and are claimed/reported as such on the tax return filed in the first year the business "is" open for business. It does not matter in what tax year(s) those startup expenses were incurred either.

woodbs

"The IRS considers a single member LLC to be a disregarded entity. Therefore, the owner of the business can not make contributions to the business. Period." is a very authoritative statement. It is also 100% WRONG.

I had to shut down my first LLC, formed in 2019, after taking to an advisor and then a lawyer who pointed out that since I never documented capital contributions to my LLC, I had no (or very weak) personal legal protections for any claims against my business.

I believe every state is different, but the IRS wants to see clear documentation showing where money came from into the business and where money went out.

As previously pointed out: it is neither income nor business expense to transfer money too and from your separate business account, so nothing to report on taxes but very thorough records are important.

Don't take my word for it and don't get your legal advice from a tax software blog. Pay a few bucks to get professional advice; in 2025, it doesn't cost as much as you might think.

one more nugget: It was pointed out to me that unless I want "LLC" on my name, which I do, an LLC is a waste of money and a headache when starting out. Just form a sole-proprietership and get some liabiility insurance. Depending where you are, insurance might be a lot cheaper than anual LLC fees/taxes.