How to Move Transaction Between Separate Businesses

RebeccaI

I have 3 separate business legs that all fall under the same parent company.

Based on guidance from my business lawyer, he said that funds from Business C could be moved to Business A for expenses. At tax time, these businesses will all be considered as 1 Company.

How do I create the transaction in Business C to show that the funds were moved to Business A when those two accounts are not tied together otherwise? There isn't a way to create a "transfer" between those two accounts because I have them set up separately in Wave.

Brehil

I will need more information to properly answer your question. Assuming these are American, non-public companies, are the three companies filing consolidated or is each leg simply a DBA? The second question is the reasoning for moving, is Company C in your example lending the money to Company A or is company A providing a management or other revenue generating service from Company C. Example Company A is charging a management fee to Company C or Company C is buying a service or product from Company A.

It appears based on your question that each company maintains it's own set of books. Assuming they are filing consolidated and are separate entities, if the scenario is simply Company C is loaning Company A money then it would be a two step entry in each companies books. This can be performed different ways but the end result is the same. Option one, Company C issues a check or some other payment to Company A bank account. You could simply create the transaction and the offsetting account would be a balance sheet account. On Company C side, you would credit the bank account then debit the current asset account Due From Company A. In the Company a books you would debit the bank account and then credit the current liability account Due to Company C

If the transaction is an internal revenue generation, then the entry on Company C side would be debit Management Expense (or whatever account relates to the transaction like inventory, etc.) then credit the bank account paying the transaction. On Company A side you would debit the bank account then credit Management Revenue (or whatever income type it is). Side note, I highly recommend if it is an intercompany revenue then make a separate revenue account specifically for transactions between each company. Your tax accountant will thank you as it will make eliminating intercompany transactions in consolidation much faster.

I hope this helps and best of luck. Message me if you have any questions.