Question

S-corp owner equity (contribution) - Bank Account Starting Balance

Forum|Forum|1 year ago
January 4, 2025
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So as of 1/1/25 I elected my single member LLC to be taxed as an S-Corp. Prior to that I was taxed as a single member LLC Sole Proprietor. On 12/31/24 my business account closing balance was $30,000, making my 1/1/25 opening balance $30,000. For the new S-Crop (I started fresh with my booking software), I entered that opening balance of $30,000 an "owner's equity" and that is what it's showing as on my trial balance sheet. My business WILL be required to submit the balance sheet on my taxes, because I will cross that $250,000 threshold. Yes, my business is doing well and will greatly benefit from the S-Corp tax savings...... My question is, how will I report that "owner's equity" on my S-Corp tax filling? My understanding is that S-Corp don't have "owner's equity" it's call something else? I think I'm the only share holder? So this would be some sort of share holder equity or investment? I'm throwing a lot of verbatim out there. Please help me understand the correct term and where I will report that on the S-Corp tax filling? I know I've got a year before my first S-Corp tax filling, but I'm trying to understand this right now so that I file correctly at the end of the year.

M

Mike9241

Since no stock is issued, put the $30K on the line for additional paid-in capital. line 23 on the balance sheet (2024 form). It's treated as stockholder's equity and gives you a tax basis of the same amount. this is important because it's likely you'll have to file form 7203 with your 2025 return where you have to enter your tax basis along with the k-1 info.