Structure of accounts for pre-business purchases

Prevention_Athletics

Hi!

If I have expenses, such as personally paying for the LLC creation service for an LLC. How do I properly enter these expenses in Wave to properly identify for tax reasons? One member has made the initial capital investments and the other is "sweat equity".

Right now I have it as "Owner Investment" but there are two members so trying to understand if I need to setup something additionally that assigns such expenses to an individual member.

I'm assuming they are considered capital contributions but then they are expenses for the business? I'm getting confused.

Mikeg

@Prevention_Athletics,
The member that put cash out would get credit for equity and the LLC would take the expense. So let's say it cost $300 to set up the LLC. Since the expense was paid for outside the LLC we need to get it on the LLC's books. You would debit Licenses and Permit (or something like it) and credit Owner Contribution- LLC Member Name. For multi member LLC's I would recommend creating an Owner Contribution/Drawing for each member. As for the member with sweat equity, for tax purposes they do not get any credit for contributions. So if all the activity was the $300 expense, then the loss would be solely allocated to member with a capital account (if this is treated as a partnership). If this is being treated as an S-Corp then it would be split by ownership %'s.
Hope that helps