Having a hard time figuring out how input my starting bank balance and inventory after I incorporated as an LLC with S-corp election

[drcgeri]

At the beginning of 2024, I switched my business from a sole proprietorship to an LLC with S-corp election. At that point, I transferred my existing business account balance of $21,322 and about $1500 of inventory to my new S-corp. At the end of the year I had $4675 left in the account. So my distributions from my business account to myself as a shareholder are in excess of my net profit, and that's where I'm running into trouble. I thought perhaps that I needed to record the initial $21,322 as shareholder stock basis at the beginning of the year on the schedule K-1, but I don't know if this is correct, and also when I include the starting and ending balances on the schedule L, it comes back with negative retained earnings and a balance sheet that's terribly off. The step-by-step directions haven't helped with this, so I've been trying to make manual adjustments. Does anyone have any advice or experience with this?

[Mike9241]

for schedule L at the beginning of the year is the 21322+1500 show up in the liability and equity section  - most likely paid-in capital. 

beginning of the year (BOY)  total assets must equal the BOY total of liabilities and equity accounts. 

[drcgeri]

Thank you for the quick response! I wasn't sure whether to put it down as this or capital stock. I was also wondering if I should make it a loan from a shareholder and then recategorize that portion of the distributions as a repayment. Would this be another way to do it? Also, for the inventory I recategorized $1500 of the distributions as a purchase from myself and applied it to cost of goods sold. But is this not a good way of doing it? Lastly, how should I categorize these starting amounts on the Schedule K-1? It seems it would either need to be shareholder stock basis or basis from any capital contributions made during the tax year, but I'm not sure which one. Thanks for your help!