: How to enter members drawings on a balance sheet in a UK LLP I am writing up the annual accounts for our LLP, and I am unsure where to put the Members drawings on the balance sheet. Should the amount drawn by members be

Vote Up Vote Down   0 Reactions

Login to give Reaction!

Thanks for your question.

I'm assuming that as an LLP, you are not publicly traded and therefore are not trying to adhere to a particular set of accounting standards, such as IFRS. As an aside, if it's not cost prohibitive, your firm might find this helpful if you ever need to report externally.

I'm also assuming you are asking about how to report internally, and not to the government or a related tax or regulatory body. If so, you may want to consult an accountant or corporate tax attorney.

To your question, your members' deposits are considered an asset, against which you have a liability in the form of your depositors' equity. Changes in equity are typically not recorded as operating expenses per se, such as salaries or the purchase of office supplies. It may be helpful for you to differentiate your member-related assets, liabilities, profits, cash flows, and equity from those of the firm itself in order to isolate key operational changes.

While you should not rely solely on opinions and advice posted here, you may find it helpful to see a summarized example here for Assets (page 9) and Liabilities (page 11). There are also detailed examples for P&L, Cash Flow, and other reports that are all on an IFRS basis. You will see that the changes relative to Depositors versus the firm itself are differentiated in the P&L, Balance Sheet, Statement of Cash Flows, etc.

I would also recommend reviewing your draft reports with someone on staff within your firm to make sure they will be acceptable and easily understood.

Best of luck!