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Transfer Inventory from Sole Proprietor to SMLLC

Forum|Forum|3 years ago
December 7, 2022
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I sell craft supplies online. I have been running as a sole proprietor for the last few years. Since the business is growing, I want to change the structure from sole proprietor to a Single Member LLC. My question is:

How to I transfer the inventory to the LLC? Would this be a capital contribution? How do you record this in Quickbooks on both (Sole P. & LLC) ends?

Not A Product Question

Best answer by Anonymous_

@jennidez43 wrote:

....I want to change the structure from sole proprietor to a Single Member LLC.

That is essentially the same structure for federal income tax purposes.

A single-member LLC is treated as a disregarded entity by the IRS (i.e., treated the same as a sole proprietorship) so there is nothing you need to transfer in terms of inventory.

A

Anonymous_Answer

Employee

@jennidez43 wrote:

....I want to change the structure from sole proprietor to a Single Member LLC.

That is essentially the same structure for federal income tax purposes.

A single-member LLC is treated as a disregarded entity by the IRS (i.e., treated the same as a sole proprietorship) so there is nothing you need to transfer in terms of inventory.

J

jennidez43Author

Thank you for your quick reply!

I understand what you are saying that the LLC is treated as a disregarded entity by the IRS.

Since it's a "new" company and I would need to create a new company file in Quickbooks....how do I record the inventory? I am lost at this part, but maybe I am overthinking it!

A

Anonymous_

Employee

For QuickBooks, you might try posting your question on the QuickBooks board:

https://quickbooks.intuit.com/learn-support/us-quickbooks-community/misc/03/community-us

Carl11_2

Employee

There only two things that would change on your SCH C.

1. The name of the business

2. If you obtained an EIN for the business, then you will change the SSN on the SCH C, to your newly issued EIN.

There's only two things that will change in Quickbooks.

1. The name of the business.

2. If you told QB you didn't have an EIN, then you either entered your SSN, or if entered earlier in the program, the program automatically uses your SSN for the business. In QB, simply select the option that you now have an EIN, and enter the EIN.

If you need help with QB, I can only help if you're using the CD/Desktop version of the program. Otherwise, seek assistance in the QB support forum.