Expert: Ed McFarland - 5/9/2005

Question
I am trying to create financial statements for a single-member LLC.  The LLC still exists.  I need to get the statements audited so I am trying to do them according to GAAP.  I know the basics of accounting for corporations, but not for an LLC.  

The business portion of the house was depreciated for tax purposes in 2004 so I am already in the depreciation recapture situation.  

I am trying to show as much equity on the balance sheet as possible and wanted to know whether putting the FMV of the of the car (only the business use %) and the business portion of the house on the balance sheet
will keep the statements in line with GAAP.

I also don't know how to present owner draws on the financials to stay in GAAP.  There isn't a clear salary; more like draws.  The amounts vary from month to month.  Since there is only one owner and no employees, I wasn't sure whether these draws should be expensed as salary or a decrease of equity.
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Followup To
Question -
How do I appropriately account for the salary and/or draws of the only member of a single-member LLC on the financial statements to be in line with GAAP? This is a disregarded entity for tax purposes so the single-member files a Schedule C. There are no employees and only one independent contractor working for the company.

Also, this is a home based business. Should the portion of the home used for business be on the balance sheet for GAAP purposes? Should the vehicle that the single member uses in the business (business use approximately 30%) be on the balance sheet as well for GAAP?
Answer -
What are you trying to do?

Does the LLC still exist or not?

You do the income statement and balance sheet, I wouldn't include the house. I might be careful because you could create a recapature problem on the depreciation.

From what you are describing you are making this harder than it has to be.

The salary with its burden should be expensed out on the income statement.

Good luck.

Answer
The llc is the same as the corporation as far as reporting.

I have a hard time justifying the percentage of the fmv of the business use of the car as an asset and certainly a part of the house.

As far as how the owner takes out the money, it is either salary or dividend. Think S Corp here. Leave the equity alone if it is a dividend and adjust the retained earnings.

Who wants this audited?