How do you record a transfer between two of your rental LLCs' bank accounts?

Why a transfer between LLCs needs care

Each LLC is its own entity with its own books. When Oak Street LLC pays for a repair at Maple Court LLC, money crosses a line the LLCs are supposed to keep clear. If you book it as income on one side and an expense on the other, both profit and loss reports are wrong, and the separation between the entities looks weaker to anyone who checks.

The IRS and courts care about whether an entity is treated as separate in practice. This article is about bookkeeping, not legal advice. Whether a transfer is a loan, a contribution or something else is a question for your CPA and attorney, and the books should show whichever you decide.

Record it as a due to and due from

1. Decide the purpose and write it down: a short loan, a reserve top-up or paying the other property's bill.
2. In the sending LLC, record the money out as a due from the receiving LLC (an asset), not an expense.
3. In the receiving LLC, record the money in as a due to the sending LLC (a liability), not income.
4. Keep the same amount and date in both books so they mirror each other.
5. When the money is repaid, reverse the entries in both books.

Example a made-up owner moves $2,000 from Oak Street LLC to Maple Court LLC to cover a roof repair. Oak Street records a $2,000 due from Maple Court and its bank drops by $2,000. Maple Court records a $2,000 due to Oak Street and its bank rises by $2,000, then pays the roofer $2,000. When Maple Court repays $2,000 later, Oak Street's due from clears to $0 and Maple Court's due to clears to $0.

Mistakes to avoid

• Booking the money in as income in the receiving LLC. It inflates rent income and your tax.
• Booking the money out as an expense in the sending LLC. It deducts something that was never spent.
• Moving money by an owner's personal account. It creates two transfers instead of one and blurs who owes what.
• Forgetting the repayment, so the due balances sit for years with no plan.

If you move money from LLC to LLC often, that pattern is a sign to ask your CPA about the structure. A holding company, reserves held in each LLC, or a different way to fund repairs may be cleaner.

Going through the owner instead

Another way is to move money to the owner as a distribution from one LLC and then in as a contribution to the other. That puts the owner in the middle and creates two clean entries with no balance between the LLCs. It can matter for taxes and for how a lender sees each property, so it is a decision for your CPA. The details of those entries are covered in owner draws vs distributions.

How DoorKeeping handles it

DoorKeeping keeps a separate ledger for each LLC, so a transfer between two of your bank accounts shows in each LLC's books as its own line, and never as income or an expense. Ask Claude or ChatGPT for each LLC's balance or for all transfers last quarter. DoorKeeping gives no legal or tax advice and costs $2 per unit per month with $0 in other fees.

Sources

1. IRS Publication 583, Starting a Business and Keeping Records, read Oct 30, 2026
2. IRS Publication 527, Residential Rental Property, read Oct 30, 2026

Questions

Can I just pay one LLC's bill from another LLC's account?

You can, but the books must show it as a transfer between the entities, not as that LLC's own expense. Ask your CPA whether a loan or a contribution fits your case.

Do I need a written loan agreement between my LLCs?

A short written note with the amount, date and repayment plan is a good habit. Ask your attorney whether a formal agreement helps in your situation.

What if I never repay?

A balance that never gets repaid may be treated differently for tax or legal purposes. Raise it with your CPA before year end.