LLC bookkeeping: monthly close, bank accounts and owner transactions
Work through LLC sales, processor fees, owner contributions and a two-account monthly close. Exentax helps organize your books and annual tax records.
Good LLC bookkeeping tells you what the business earned, what it spent and where its money is. It should also explain transfers, owner contributions and distributions without treating every bank deposit as revenue. With the right routine, several accounts and currencies become manageable parts of one business.
You do not need to become an accountant to give your LLC a reliable foundation. You need complete records, clear responsibilities and a method suited to the activity. This guide sets out a practical monthly process, including what to collect for annual tax preparation and when to ask for professional help.
Start with the business, not an accounting subscription
A consultancy receiving a few invoices, a store with daily payouts and an LLC holding investments need different records. Start by listing the accounts, processors, contracts and types of transaction involved. Include accounts that were closed or unused during part of the year.
Bookkeeping records the activity; tax preparation determines how that activity is reported. An LLC's federal classification matters: single-member disregarded entities, partnerships and corporations do not automatically use the same returns. Foreign ownership is relevant, but does not make Form 5472 the universal return for every LLC.
Can a spreadsheet be enough?
Yes, for an appropriate business with a disciplined process. Software is not mandatory simply because the entity is an LLC. The IRS recordkeeping guidance focuses on clear records, not a prescribed brand.
Choose a tool by the work it must handle: currencies, inventory, member balances, payment processors, access permissions and export quality. Revenue alone does not determine whether a spreadsheet is suitable. A low-revenue store can have far more entries than a higher-revenue consultant.
Whatever you choose, you should be able to retrieve the records without depending on one person's login. Keep original statements and supporting documents outside the accounting subscription too. Agree who reviews the work and how corrections are recorded.
Build four connected records
A bank feed is a starting point, not the complete books. Organize information so that another person can follow an entry back to its source.
- Sales and receipts: customer, invoice, service or product, relevant dates, original currency and gross amount.
- Costs and assets: supplier, business purpose, invoice, payment and whether the purchase needs separate asset treatment.
- Transfers and member transactions: sending and receiving accounts, owner, contribution, distribution, loan or reimbursement.
- Balances and monthly close: opening and closing balances, unsettled items, differences and the evidence resolving them.
Use transaction references to connect these records. Similar amounts are not enough to prove that two entries are the same transfer. Check currency, dates, account ownership and any conversion or processing charge.
Keep owner money separate from trading results
An owner funding the LLC does not create a customer sale. A distribution to that owner is not an ordinary operating expense. A payment on behalf of the LLC needs its own explanation: purchase, reimbursement, loan or contribution, as appropriate.
For a multi-member LLC, identify the member behind each movement. Equal ownership percentages do not mean every contribution or withdrawal is equal. Keep member balances and the supporting agreement available for the professional preparing the accounts.
Reconcile processors before counting bank deposits as sales
A processor may deduct fees, refunds or reserves before sending a payout. Recording only the bank deposit can conceal the underlying sale and make the totals difficult to explain.
Illustrative example: customers pay 1,000 USD; refunds total 100 USD; the processor retains 30 USD in fees; 870 USD reaches the bank. The records must explain all four amounts. The payout is not a second sale, and the fee is not an unexplained reduction in revenue.
| Movement | Record to retain |
|---|---|
| Customer payments | Gross sales and invoice or order references |
| Refunds | Refund amount and original sale |
| Processing costs | Provider fee report |
| Bank payout | Settlement reference and receiving account |
This is a bookkeeping illustration, not a rule that every platform acts as your payment agent. A merchant-of-record arrangement may produce different contractual revenue records. Read the agreement before treating every platform's customer receipts as your own gross sales.
Close each month in five steps
1. Collect the complete statements
Download statements for every bank, fintech, processor and investment account used by the LLC. Include all currencies. PDF statements establish the period and balances; CSV exports can make transaction review faster. Keep both where available.
Do not replace a complete statement with a screenshot of the current balance. If a provider holds money before paying out, its statement matters alongside the bank statement.
2. Match activity to its supporting documents
Connect invoices, receipts, contracts, refunds and transfers. An import may suggest a category, but someone still needs to review ambiguous descriptions. Maintain a short list of open questions instead of guessing to make the month look finished.
3. Check each account and currency
Compare the book balance with the statement balance for the same date. Identify outstanding payments, settlement delays, duplicates and charges. A reserve transfer changes where cash is held; it does not automatically change profit.
4. Review unusual and owner-related movements
Look separately at member funding, distributions, loans, reimbursements, asset purchases and related-party payments. A clear explanation now is more useful than reconstructing the purpose months later.
5. Save the reviewed close
Retain the statements, reports and explanation of adjustments. A later correction should remain identifiable. The next month's opening balances must connect to the previous close, including any properly documented changes.
A complete close: two accounts, cash and profit
Carry the processor's 870 USD payout into a full month. This is an illustrative example, not a client case. The LLC starts with 1,200 USD in operating account A and nothing in reserve account B. Every movement has settled, all amounts are USD and there are no other transactions.
The owner contributes 4,000 USD. The LLC pays 200 USD for services used that month, buys equipment for 800 USD, distributes 500 USD to the owner and moves 600 USD to its reserve account. In this example, the equipment is recorded as an asset before depreciation, without assuming an immediate tax deduction.
| Movement | Account A, USD | Account B, USD |
|---|---|---|
| Opening balance | 1,200 | 0 |
| Owner contribution | +4,000 | 0 |
| Processor payout | +870 | 0 |
| Services used this month | -200 | 0 |
| Equipment purchase | -800 | 0 |
| Owner distribution | -500 | 0 |
| Transfer between LLC accounts | -600 | +600 |
| Closing balance | 3,970 | 600 |
Account A checks out as 1,200 + 4,000 + 870 - 200 - 800 - 500 - 600 = 3,970 USD. Add account B's 600 USD and the LLC holds 4,570 USD in cash. Moving money between those accounts does not change that total.
The trading result under these assumptions is 1,000 - 100 - 30 - 200 = 670 USD, before depreciation and other adjustments. The 30 USD processing fee is already reflected in the 870 USD deposit; do not subtract it from the bank balance again. Owner funding is not another sale, and the 500 USD distribution does not reduce this trading result.
This separates available cash, business performance and contributed funds. The equipment remains an 800 USD asset in this illustration; tax treatment is a separate determination. IRS Publication 583 explains how to organize the books and check them against the bank.
Keep the service date as well as the payment date
For work completed in December and paid in January, keep both dates. Cash accounting generally follows actual or constructive receipt; accrual accounting follows when income is earned. Publication 538 explains these methods. Give the preparer the invoice and payment terms so the applicable method, not just the bank statement, determines the reporting period.
EUR and USD: keep the original amount and the conversion
A USD tax-reporting requirement does not stop an LLC from receiving EUR. Keep the original currency, amount, relevant transaction date, conversion source and reporting value. Record the provider's actual conversion and charges separately where applicable.
The IRS exchange-rate guidance generally points to the rate when the item is received, paid or accrued. Do not apply an annual average indiscriminately to individual transactions.
Agree the method with the preparer and apply it consistently. Bank conversion, tax translation and foreign-exchange gains or losses are related, but not interchangeable. A later conversion of retained euros can produce a different USD amount from the original receipt.
Include crypto and investment accounts in the records
If the LLC uses an exchange, broker or wallet, retain transaction histories, quantities, fees, dates and valuation evidence. Identify transfers between accounts or wallets belonging to the same entity so they are not mistaken for new receipts.
Do not use “nothing happened until I withdrew to the bank” as a classification rule. Sales, exchanges and payments with digital assets need their own review. The IRS digital-asset guidance provides the federal starting point.
Prepare a useful annual handover
For a calendar-year LLC, collect the full January-to-December period, or the period from formation when it started during the year. Include closed accounts, processor reports, owner movements, investments and explanations of unresolved entries. A bank with no sales may still show formation funding or expenses.
For a foreign-owned US disregarded entity, the Form 5472 instructions cover relevant related-party transactions, including contributions and distributions. The preparer determines the applicable filing; statements support that preparation rather than becoming routine attachments to the return.
A useful handover also identifies changes in members, activity, address and ownership dates. Separate this work from state renewal: confirming state registration is not the same task as preparing federal tax information.
Our guide to Form 1120 and Form 5472 explains the filing scope separately from the monthly bookkeeping process.
Questions owners ask about LLC bookkeeping
Do I need paid accounting software?
Not necessarily. Choose the method around transaction complexity and review needs. A spreadsheet can be suitable; it still needs complete records, consistent categories and an accountable reviewer.
Should I collect statements if there were no sales?
Yes. Funding, fees or member transactions can exist without revenue. Complete statements let the preparer establish what actually happened.
Can the LLC have several accounts?
Yes. Reconcile each account and identify transfers between them. Operating cash, currency collections and reserves can have different purposes within one set of books.
Are owner withdrawals deductible expenses?
Not simply because money leaves the bank. A distribution is separate from an expense; a reimbursement or other payment must be supported and classified on its own facts.
Does Exentax need every transaction classified by me?
Start with complete statements and documents. Agree the scope of review with our team; specific questions can then focus on genuinely unclear transactions rather than asking you to guess every category.
Put a dependable team behind the numbers
Exentax helps organize the LLC's records and coordinate the tax work around its actual activity. We agree what you provide, who reviews it and which accounts and periods are covered, so responsibility is clear from the outset.
Bring the list of accounts, the latest statements and any gaps in earlier periods. We can assess the work needed and prepare an orderly handover or ongoing routine. You retain access to your documents and a team to discuss the decisions behind the figures.