New: the complete multi-entity toolkit is live — 7 tools for owners who run multiple LLCs. Read the playbook

Due To / Due From Tracker

When you own multiple LLCs, cash and costs move between them every week. If you don't track it, year-end reconciliation is painful — and auditors, lenders, and the IRS will ask about unrecorded intercompany balances. Log the movement here; get clean journal entries and a running balance per entity pair.

The trap every multi-entity owner falls into

You own 2, 3, 5, 7 LLCs. One LLC has cash this month. The software bill, the owner payroll, the insurance premium, the rent — whatever comes due — gets paid out of whichever account has money. Nothing wrong with that operationally.

The problem: your P&L now says the LLC that paid is the LLC that incurred the expense. It didn't. The expense belongs to whichever entity benefited. Over 12 months, one entity looks bloated with costs that belong somewhere else, another looks artificially profitable, and when you walk into a bank to refinance — your DSCR is a disaster that doesn't reflect reality.

The distinction that fixes it: Cash ≠ P&L

These are two separate questions a lot of business owners (and honestly, a lot of bookkeepers) conflate:

  • Cash= which bank account paid the bill. This is a mechanics question. It doesn't have to match which entity the expense belongs to.
  • P&L = which entity actually benefited from the expense. This is an allocation question. It should track reality, not banking convenience.

When they diverge — and they always do in a multi-entity shop — the difference lives on the balance sheet as a due-to / due-from entry. Think of it as an IOU between your entities.

A worked example: owner salary

You pay yourself $200K/year, all out of Entity A because that's where payroll is set up. In reality, 30% of your time supports Entity B.

Cash side (doesn't change):Entity A's bank pays you $200K. Nothing moves between entities.

P&L side (gets allocated):

  • Entity A books $140K of salary expense (70%) — its actual benefit.
  • Entity B books $60K of salary expense (30%) — its actual benefit.

Balance sheet (the IOU):

  • Entity A: Due from Entity B = $60K (B owes A because A laid out the cash).
  • Entity B: Due to Entity A = $60K (mirror of the above).

Same cash motion as before. Dramatically different P&L — and it's the correct P&L. When your CPA rolls up consolidated financials, the $60K due-to and due-from eliminate against each other and the $200K total matches reality. This tool logs that transaction and gives your bookkeeper the exact journal entries to book on both sets of books.

You don't have to move cash at all

If all entities have the same owner and you trust the paper trail, you can run everything out of one bank account and just track the IOUs. Moving cash between entities creates its own set of questions (capital contributions, loans, distributions — each with tax treatment). Keeping it as a due-to / due-from balance on the books is usually cleaner than wiring money back and forth every month.

Annually (or when you refinance), the IOUs either get settled with a real cash transfer, documented as a short-term intercompany loan, or offset by a management fee under a written agreement. That last option — a management services agreement — is what turns your paper trail from “informal” into something a bank and the IRS actually respect.

What the bank sees

Underwriters are nervous about intercompany flows they can't trace. If your books show one LLC constantly wiring cash to another with no documented reason, the assumption is that the borrower is propping up a weak affiliate and the cash could vanish. If your books show a clean due-to / due-from ledger tied to a management agreement — expenses allocated by a written methodology, no cash movement required — the story goes from “what's going on here?” to “standard multi-entity structure.”

Before you rely on any of this: check with your CPA and your attorney

Your CPA needs to weigh in on: the tax treatment of unpaid intercompany balances (the IRS can recharacterize them as loans requiring imputed interest, or as disguised distributions/contributions), how this interacts with any S-corp elections, whether your entity mix triggers controlled-group or aggregation rules, and whether you need to issue 1099s for any services-rendered flows. This tool does not give tax advice.

Your attorney needs to weigh in on: whether your intercompany practices preserve the liability separation your multi-entity structure was set up to create. The reason you have multiple LLCs in the first place — asset protection, liability firewalls, different investor groups, sale-readiness of individual divisions — is exactly what sloppy intercompany practices can blow up. Piercing-the-corporate-veil case law lives here. A written management services agreement, board or member consent for the arrangement, and consistent documentation are what protect you.

How to use this tool

  1. Enter your entities below.
  2. Log each intercompany event: who paid (cash side), who benefited (P&L side), amount, category.
  3. Review the open balances — this is what shows up as due-to / due-from on each entity's balance sheet.
  4. Copy the journal entries out and hand them to your bookkeeper to book in QuickBooks (or whatever GL you use). The two sides mirror each other, so the intercompany accounts stay reconciled.
  5. Annually, settle — either via a cash true-up, a written management fee, or documented loan terms. Your CPA and attorney should direct this step.

Entities

0 defined

Log a transaction

Define at least two entities above before logging transactions.

Reminder: If intercompany balances stay open for more than 12 months without a written agreement or settlement, the IRS can recharacterize them as disguised distributions or contributions — with tax consequences. Consider a management services agreement and an annual true-up.