Sole Member S Corp balance sheet issue

Hi thanks so much for all your help already; you guys have saved me already once today.

My current issue is this:

When I contributed to my Sep IRA I did it from my personal account instead of directly from the business account without realizing it should have been from the business account. I also made a few purchases that I did with my personal CC instead of my business CC (I have the receipts). So throughout the year of 2021 I never withdrew any money from my business account outside of my W2 wages and what I used my business CC for so it seems like I have more 'cash assets' than I should at the end - essentially I had 36k (sep IRA) + 4k (misc expenses) that I deducted but weren't actually withdrawn from the business account during the calendar year.

Is it ok to adjust my companies total ending assets (which I had assumed was just the end of year balance of my business checking account) to reflect what was taken out of my personal account for the business as well so the book is balanced?

Addendum:

I'm so sorry I'm overwhelmed and made a mistake. I actually did contribute my SEP IRA from my business account but did so in early 2022. From my understanding I could still contribute for 2021 in 2022 as long as it was before April 15th. How do I adjust that in the book keeping?

651

Level 15

Oct 14, 2022 5:45:55 PM

@Rick19744

Level 15

Oct 14, 2022 5:55:46 PM

First .... STOP paying for any business expenses from a personal account and visa versa ... that practice will get you in deep doo doo in an IRS audit.

Next, for bookkeeping entries, the expenses paid with personal funds or CC are entered as expenses on the books with a corresponding entry to "loan from shareholder" in your liabilities account. Same situation

for the SEP contribution.

Level 2

Oct 14, 2022 6:14:12 PM

(Thank you for explaining the other expense issue)

Level 13

Oct 14, 2022 7:01:30 PM

I can understand being overwhelmed and knowing so is good.

However, at this point, I believe you need to stop......... and connect with a tax professional to get you started on the right path.

There are just too many questions at this point to really provide guidance:

How are you maintaining your books and records
Method of accounting
Are there other items that you missed....you don't know what you don't know !!!
@Critter-3 suggested one method for accounting for your errors in expenses, but is this really what you want to do? Is this a loan or really a contribution to capital? If it's a loan you need to go down the path of paying it back, what interest rate, etc. Don't know enough about your business to know which avenue should be used. A tax professional can explain the pros and cons of each and you can make a decision.
Don't be penny wise and pound foolish at this point.
Could your return be late at this point.....yep. Just make sure you have sufficient estimated taxes paid in and meet with a tax professional. This individual can also help you out should you receive a late filing penalty.

Level 2

Oct 15, 2022 6:03:03 AM

Hey just talked to a CPA.

The SEP IRA just needed to be placed under the "Will contribute to" rather than "Have contributed to" section; but there was an error with turbotax where it keeps defaulting to "will contribute to" no matter how many times I update it; so he said I could just put it under "Other liabilities" with an explanation

As for the other expenses they can go under Additional Paid in Capital.

So the two questions were answered in about 30 seconds; he didn't charge me which was nice. Hope this helps anyone else in the future.

Level 13

Oct 15, 2022 10:00:40 AM

As stated, a one on one is generally the best avenue.

Many unknowns can be addressed and answered. Forums are like texting.....sometimes you just need to pick up the phone. 😁

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Sole Member S Corp balance sheet issue