Question

John Schumer operates three entities that he owns 100% in the Providence, RI area. There are two limited liability companies (LLCs) and one S corporation. Each of the LLCs holds rental real estate. LLC 1 holds a six-story, multi-unit building. The minimum tenant stay there are 31 days. And there are mandatory housekeeping serviced provided on a bi-weekly basis. LLC 2 holds a single-family home rented on an annual basis. Both LLC's pay the S corporation a management fee. John is the sole employee of the S corporation, from which he took a full-time salary for managing the two LLCs, where he materially participates. He is an architect. However, all his time spent running the three businesses. He no longer performs architectural services.

In this situation, why does John eliminate S-corporation can less bookkeeping?

Answer 1

Bookkeeping means recording,classifying,posting and summarising all business transactions occur during an accounting period.The Bookkeeping is done whether in electronic mode or in manual mode.Under bookkeeping cash book,Journal, Bank ledgers and all other ledgers are prepared in a legible form.

John can eliminate S-Corporation less bookkeeping because the only business o f S-Corporation is to manage the other two LLCs.There are no complexities in managing the business of other two LLCs. Even the S-Corporation is itself managed by the John which is its sole employee.There are no multiciplity of transactions in the business.

The only source of income of S-Corporation is management fee received from the two LLCs.The sole employee John is receiving the full time salary from S-Corporation.There are no other sources of income or income from other operations as per the details given above.

Hence keeping in mind the nature of business of S-Corporation,the bookkeeping in respect of S-Corporation can be kept in a simplified manner i.e. less bookkeeping can be done for S-Corporation.