Operating your business as a limited liability company? As you probably know, getting the QuickBooks accounting program setup correctly in your situation can be, well, tricky. But in a sense, that's a good thing. The trickiness stems from the tax accounting flexibility that the LLC option provides.

Fortunately, you can follow these three accounting tricks to keep your QuickBooks LLC setup under-control and well-organized.

Trick #1: Pretend the LLC Is Something Else

A limited liability company, for tax accounting purposes, is always treated as something else. For example, a one owner LLC (also known as a single member limited liability company) operating a business is treated as a sole proprietorship. An LLC with multiple owners that operates a business is treated as a partnership.

What's more, both limited liability companies with a single owner, or member, and those with multiple owners, or members, can make tax elections to be treated for tax return purposes as regular C corporations or as Subchapter S corporations.

And all this leads to a first trick for setting QuickBooks up for a limited liability company. When you run the QuickBooks EasyStep Interview to setup QuickBooks, don't indicate that you're setting up QuickBooks for a limited liability company. Rather, specify that you're setting up QuickBooks for the type of taxpayer the limited liability company be treated as.

For example, if you're a one owner LLC that hasn't made any special elections to be treated as a corporation, tell QuickBooks you're a sole proprietor. If you're a multiple member limited liability company (members are LLC owners) that hasn't made any special tax elections, indicate to QuickBooks that you are a partnership. And if you have made an election to be treated as a C corporation or an S corporation, tell QuickBooks that's what you are--a C corporation or an S corporation.

Trick #2: Combine Child and Parent LLCs in a Single QuickBooks Datafile

A common asset protection technique is to have a parent LLC or a parent corporation own child LLCs. A retailer with three locations, for example, might put each store location into a separate LLC. These three child LLCs might then be owned by a parent LLC or parent corporation.

Separate LLCs, however, shouldn't be segregated into separate QuickBooks datafiles. Rather, the LLC's accounts, income and deductions should be tracked within the parent's QuickBooks data file.

This combination seems (at first glance) just plain wrong. But here's the logic. In a parent-child structure, the child (so to speak) is owned by the parent. And that means for tax accounting, you combine the income

Article continued below...