Owner Contributions vs Owner Draws: Bookkeeping for the Money You Put Into and Take Out of Your LLC

What counts as owner money in an LLC's books?

Money moving between you and your LLC: contributions in, draws out, business costs you paid personally, and loans you make to it. Each has its own account. None of it is income or a cost of the business.

Here is the worksheet the books follow. Each kind of owner money has 1 place to go and 1 record behind it.

Owner contributions, owner draws and loans from the owner are all in the core set of a real estate chart of accounts for flips, wholesale and rentals. Owed to the owner is a short-term balance that exists only until you are repaid.

Money between 2 of your own LLCs is not owner money. On Jul 8, 2026, Demo Flips LLC sent $40,000 to Demo Rentals LLC, and both sets of books record it with due to and due from accounting: a due-from on one side and a due-to on the other.

How is an owner contribution recorded?

As money in to the business checking and an increase in owner contributions, an equity account. It is not income, so it never raises profit. The record shows the date, the amount and a note on its purpose.

The owner of Demo Flips LLC put money in 9 times in the sample year. Every deposit carries the same memo in the ledger: "Owner added cash to cover costs". Most arrived on the day a project was bought.

From the sample ledger of Demo Flips LLC.

The money goes to the LLC, not to the project. The date beside a purchase is a note for the record. The project's profit does not change because of where the cash came from.

How is an owner draw recorded?

As money out of checking and an increase in owner draws, an equity account. A draw is not a cost of the business in the books, so it lowers the bank balance and leaves every deal's profit unchanged.

The owner of Demo Flips LLC took 12 draws of $8,000.00, on the 1st of each month from Oct 1, 2025 to Sep 1, 2026. That is $96,000.00 for the year. No project's profit moved because of them.

On Jan 1, 2026, the owner put in $25,000.00 and took the $8,000.00 draw on the same day. The books record both. They never net them into a single deposit of $17,000.00, because the contribution and the draw are 2 different records.

A draw lowers the bank balance and leaves profit where it was. That is one reason cash and profit are 2 different numbers. We cover that in cash flow vs profit in real estate bookkeeping.

What happens to personal charges on the business card?

They are moved out of business costs and into owner draws, with the receipt kept. The card still has to be paid, so the charge stays on the card account. Only its category changes.

Demo Flips LLC found 4 personal charges on its business card during the year and moved each one to owner draws.

From the sample ledger.

Left in business costs, those $1,203.70 would make the business look more expensive than it was. Moved to owner draws, they sit with the $96,000.00 of monthly draws. Owner draws for the year come to $97,203.70.

How do you get repaid for a business cost you paid personally?

Record the cost on the property it belongs to and a balance owed to you, with the receipt. When the LLC pays you back, that balance goes to zero. The cost stays on the deal either way.

1. 1Keep the receipt and note which property the purchase was for.
2. 2Record the cost on that property, with a balance owed to you for the same amount.
3. 3Pay yourself back from the business account for the exact amount on the receipt.
4. 4Record the repayment against the balance owed to you, which takes it to zero.

Here is one from October 2026, after the sample report's September close. On Oct 15, 2026, the owner paid Sample Hardware Supply $486.25 on a personal card for demolition supplies for Project 10: contractor bags, saw blades and safety gear. Demo Flips LLC paid the owner back on Oct 22, 2026. This example is invented for this page.

Invented for this page. Owed to the owner is back to $0.00 after the repayment.

The $486.25 stays a cost of Project 10 whoever paid it first. If you decide not to be repaid, the same cost is recorded with an owner contribution instead of a balance owed to you.

When is owner money a loan instead of a contribution?

When the LLC is meant to pay it back and a written note says so, with an amount, terms and a repayment plan. Until then, the books hold it as a contribution and flag it.

None of the 9 deposits into Demo Flips LLC came with a note, so all 9 are recorded as owner contributions. A loan from the owner needs its own record:

• A signed note with the amount and the date the money was lent.
• The terms: interest, if any, and when repayments are due.
• Each repayment, recorded against the loan balance as it happens.
• A balance that agrees with the note at every month end.

Whether money you put in is a loan or a contribution has tax and legal effects. Your CPA and your attorney decide it, and the books record what the papers say.

When the money comes from someone other than you, the question becomes who put money in and who gets it back. We cover that in partner capital accounts and private lender reporting.

What if nobody knows what a transfer was?

It stays on a short list of questions for you, with the date, the amount and who it went to. Once you answer, it moves to owner draws or to the account it belongs in.

Demo Flips LLC has 1 open item at the September 2026 close: $850.00 sent to Sample Credit Union on Sep 3, 2026. The bank statement shows only a transfer, so the owner is asked: business or personal?

1. 1The item is flagged with its date, amount and who it went to.
2. 2You answer the question: business or personal.
3. 3Personal goes to owner draws. Business goes to the account it belongs in, with the document behind it.
4. 4The flag clears, and the item leaves the list.

Which questions go to your CPA?

How each kind of owner money is treated on your return, whether an advance is a loan or capital, and what your draws mean for your tax. The books supply the dated record. Your CPA makes those calls.

Bring these questions to your CPA, with the record below:

• How are my contributions and draws treated on my return this year?
• Should any money I put in be documented as a loan? (Ask your attorney too.)
• Does the way I take money out of the LLC matter for my tax?
• What owner money records do you need from the books at year end?

The open $850.00 transfer is not in this table until the owner answers.