My newest client is this small online boutique called “The Jean Junky”. This is a small two-owner LLC (Limited Liability Company) owned by my wife and daughter. They are having so much fun that it really isn’t fair.
A two-owner LLC is taxed like a partnership. Small partnerships are not required to provide a balance sheet and can use the same bookkeeping system as a sole proprietor. Larger partnerships must provide a balance sheet with the income tax return and this requires double-entry bookkeeping. Since the women are hoping to grow this adventure into a “large” partnership, I’m having them keep books using the double-entry system. A partnership must generally use the same tax year as its partners, but can use a fiscal year if there is a business purpose or an IRC section 444 election was made. Complex books and records are needed when a partner exchanges property, other than cash, for a partnership interest or for special allocations and basis elections.