Transfer Inventory from Sole Proprietor to SMLLC

[jennidez43]

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?

[Anonymous_ · Accepted solution]

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@jennidez43 wrote:

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

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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.

[jennidez43]

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!

[Anonymous_]

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

[Critter-3]

WAY  overthinking this ... if you get an EIN for the Sch C business to call it an LLC for the state but do NOT incorporate or take on partners then you will continue to file a Sch C as you always have done so on the federal return.    And your bookkeeping will not change at all ... there is no need to set up a new business in QB ... just keep doing what you have been doing bookkeeping wise.   

[Mike9241]

with a single-member LLC you continue to file the same schedule C you have previously, there is no need to start a new set of books because for tax purposes nothing has changed except now you may have a new business name. 

[Carl]

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.