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June 12, 2008, 11:35 am

Accounting for changing company structures

Dianna Clark, Savannah, Ga.
I'm working with a small business in correcting its accounting records for 2007. In the last quarter of 2007, the company restructured from an LLP to an LLC. The CPA said that the company cannot reverse the last quarter entries to the "drawing" accounts to payroll accounts for the owners because the IRS will only accept tax filings as an LLP for all LLCs. The owners will lose the advantages of restructuring to an LLC if the company must account for and report earnings as a partnership. Two of the owners need to be paid a salary for their work. What must be done to permit the two owners to draw a salary in lieu of recording all disbursements to them as "partnership draws"?

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