Do two LLCs need two sets of books?
Yes, in almost every case. If you formed two LLCs, each one gets its own bank account and its own books. The point of a second LLC is usually to keep something apart, like a rental property, a new product line or a partner's share, and books that mix the two undo that on paper.
The one real exception is a single LLC with two brand names. That is still one business, so it gets one set of books with each brand tagged. Find your situation below.
| Your situation | Books | Bank accounts | What to watch |
|---|---|---|---|
| Two unrelated businesses, each its own LLC | Separate set for each LLC | One per LLC | Shared software or phone bills paid from one account |
| A holding LLC owns a building, an operating LLC rents it | Separate set for each LLC | One per LLC | Rent recorded as income in one and expense in the other |
| One LLC selling under two brand names | One set, each brand tagged | One is fine | Tag every sale and cost, or the brand reports mean nothing |
| One LLC you own with a partner, plus one you own alone | Separate set for each LLC | One per LLC | Your partner sees only the shared LLC's books |
| You want one combined report across all of them | Separate sets, combined report on top | One per LLC | Remove the money they owe each other before combining |
Doesn't the IRS ignore a single-member LLC anyway?
Only for some purposes. The IRS page on LLCs says a one-member LLC is treated as disregarded from its owner for income tax, unless it elects to be taxed as a corporation. The same page says it is still a separate entity for employment tax and certain excise taxes. An LLC with two or more members is classed as a partnership unless it elects otherwise.
None of that changes the bookkeeping. Which election suits you is a question for your CPA. The books are what your CPA works from either way, and they are much easier to work from when each LLC has its own.
What goes wrong when two LLCs share a bank account?
The problems show up later, usually when someone outside the business asks for numbers. A lender wants one LLC's statements and you can't produce them without untangling a year of transfers. Your CPA asks which LLC paid for the new laptop and nobody remembers. A partner in one LLC sees spending that belongs to the other.
The IRS guidance on what records to keep lists the supporting documents behind your books: sales slips, paid bills, invoices, receipts, deposit slips and canceled checks. With one shared account, every one of those has to be sorted by entity after the fact. With two accounts, the bank does most of the sorting for you.
How should money moving between your LLCs be recorded?
Record it in both sets of books, as money one LLC owes the other. It is not an ordinary expense in one and income in the other unless there is a real charge behind it, like rent on a building or a management fee you have agreed in writing.
- Give each LLC its own bank account and its own card, and pay each LLC's bills from its own account.
- When one LLC pays a bill that belongs to the other, record it in both sets of books as an amount owed between them.
- For a real charge such as rent, keep a written agreement and record the same amount as income in one LLC and expense in the other.
- Each month, reconcile every bank and card account to its statement, entity by entity.
- Check that the amount one LLC says it is owed matches what the other says it owes.
- Settle the balance between them from time to time with an actual transfer, recorded on both sides.
That last check is the one that catches mistakes. If the two amounts don't match, something was recorded in one set of books and missed in the other.
Does a South Jordan home business with two LLCs need two city licenses?
Often not. The South Jordan home occupation page says most home businesses can operate without a city license. The exceptions are in-home child or adult care and preschools, businesses with clients coming to the home, and any business another government agency requires to hold a city license.
No city license doesn't mean no paperwork. Each LLC is its own registration with the Utah Division of Corporations, which handles the annual report or renewal for an existing business. Put each LLC's renewal on its own line in the calendar. Our South Jordan page covers the city's licensing rules in more detail.
When is it worth handing multi-entity books to a bookkeeper?
If you run one LLC and one bank account, you can keep your own books with decent software and an hour a week. The math changes once there are two or more entities, money moving between them, or a partner who needs clean numbers for their share.
That is the kind of business Ivory Balance Books works with. Monthly bookkeeping keeps each entity reconciled on its own, and the monthly financial reports arrive by the 10th. At year end, the year-end package for your CPA hands over each LLC's books in a state your CPA can open and file from. If the entities have been sharing an account for a while, a historical cleanup separates them first.
Two LLCs and one tangled account?
Book a free discovery call with Melanie. It takes about fifteen minutes, and you'll know what it would take to separate your books.