Bookkeeping for an LLC or S Corp: What's Different

How the IRS treats your LLC

An LLC is a state legal entity; the IRS decides how it is taxed. By default, the IRS treats a single-member LLC as disregarded from its owner and a multi-member LLC as a partnership. An LLC can change that by filing Form 8832 to be taxed as a corporation, or Form 2553 to elect S corporation status as an entity eligible to be treated as a corporation.

Your books should match that choice, because the equity accounts, payroll and year-end return all differ.

Single-member LLC books

Keep a separate bank account and card for the business, even though the LLC is disregarded for tax. It keeps the liability protection meaningful and makes the books possible.

Money you take out is an owner draw, not a salary, and money you put in is a contribution. Record both in equity accounts rather than as income or expenses, so your profit is right when the tax return is prepared.

S corporation books: payroll and distributions

The IRS says distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent they are reasonable compensation for services. In practice, owner-employees need to be on payroll before they take distributions.

That brings payroll records, quarterly Form 941 filings and year-end W-2s into the books. Distributions go to a separate equity account, and shareholder loans need their own balance sheet account so they are not confused with pay.

Catching up S corp books before you file

Form 1120-S is due by the 15th day of the third month after year-end; for calendar-year corporations that is March 16, 2026. Form 7004 gives an automatic six-month extension of time to file, not to pay what you owe. If the books are behind, a catch-up usually covers these items first:

• Reconcile every bank, card and loan account for the year.
• Match payroll records to Forms 941 and the W-2s, which are due to employees and the SSA by February 1, 2027 for 2026 wages.
• Separate distributions, shareholder loans and reimbursements.
• Produce the year-end trial balance the Form 1120-S is prepared from.

What it costs with SF Business Solutions

Monthly bookkeeping for an LLC or S corporation starts at $250 a month; payroll is quoted with it, and we prepare and file the tax return too. Catch-up work starts at $250, and the final price depends on how far behind the books are.