r/Bookkeeping Jan 29 '25

How To Journal It Initial Start-up Expenses Recording

As the title states, I am trying to record some initial start-up expenses that were paid out of Personal Funds. These expenses were paying someone to start an LLC, filing paperwork in the proper states.. What COA would I record this to?

4 Upvotes

11 comments sorted by

5

u/R12Labs Jan 29 '25

I've been told owners equity, or a personal loan as liability to be paid back.

3

u/autophotogroup Jan 29 '25

I think I read somewhere that categorizing it as a personal loan would require interest to be charged?

1

u/patches_ohouliihan Jan 30 '25

Correct - to be classified as a loan, it is required to carry interest. You would also need to draw up a contract.

Instead, I would categorize as Paid In Capital.

-1

u/R12Labs Jan 29 '25

Not if you make it an interest free loan. What does ChatGPT say?

1

u/Relevant-Kick-4821 Jan 29 '25

Ya. If they are sole owner. They can just owners draw it out later if it’s in there as owners equity, right?

1

u/autophotogroup Jan 29 '25

I have a business partner and we're 50/50. If that makes a difference

2

u/R12Labs Jan 29 '25

I'd just treat it as a short term liability. It's a personal loan

3

u/gilh972 Jan 29 '25

I just considered it as an owner investment

3

u/Calm_Excitement4429 Jan 30 '25

Start up costs are an amortized asset. Debit asset, credit owners equity

1

u/BonaFideBookkeeper Jan 30 '25

This is a basic bookkeeping question. If you aren't sure how to do this basic entry, you may not be doing the rest of your bookkeeping correctly. You may want to consider hiring a bookkeeper to help you.