Minimal bookkeeping for your LLC: what to track (and what you don't need)

There are two ways to get your LLC's bookkeeping wrong. One is setting up expensive software with a chart of accounts, journal entries and a monthly accountant you don't need. The other, far more common, is tracking nothing — money comes into the account, money goes out, and you glance at the balance now and then, trusting that "I'll remember". The second one is the one that bites, and usually right when it's time to file with the IRS.

The good news: for a non-resident single-member LLC, what you actually need to track fits in a spreadsheet. The bad news: that minimum is not optional. Let's separate the essential from the nice-to-have so you keep exactly what's needed, no more and no less.

Do I have to keep books if my LLC doesn't pay tax?

Yes, even if your LLC ends up owing zero federal tax. And here's the nuance most people don't know: since 2017, a single-member LLC owned by a foreigner is treated as a corporation just for a specific set of information rules — those under section 6038A. The practical upshot is that you're required to keep records of your transactions so you can file Form 5472 alongside an informational 1120 every year.

There's no small-business exception that gets you off the hook here: even if you invoice very little, the obligation to keep records and file still applies. In other words, minimal bookkeeping isn't a recommended "best practice" — it's the backbone of an annual legal obligation.

"I don't pay tax" and "I don't have to track anything" are two different statements. The first can be true; the second almost never is for a non-resident LLC.

What you actually need to track: five columns

Forget the accounting jargon. What holds up your filing is five groups of movements, and they all come from looking at your bank account:

• Income received. What actually landed in the company account: date, amount, from whom and for what. Not what you invoiced — what you collected.
• Expenses paid. What went out for real business costs (software, registered agent, fees, suppliers): date, amount, to whom and for what.
• Capital contributions. The money you put into the LLC from your personal account. This is a related-party transaction and goes on the 5472.
• Owner draws. The money you take out of the company into your pocket (how to pay yourself from your LLC). Also a reportable transaction on the 5472 — it's not invisible.
• Account balance. The monthly bank statement. It's your source of truth: if your sheet doesn't match the bank, the bank wins.

Notice something: contributions and draws (the third and fourth columns) are exactly the ones almost nobody writes down and the ones the 5472 will ask for. That's why a record that only watches income and expenses falls short for your specific case.

Why cash basis suits you

For a micro-LLC providing services, the simplest and most common approach is to keep books on a cash basis: you log money when it enters or leaves the account, not when you issue the invoice. If you invoice in December and get paid in January, the income belongs to January — the month the money touched the account.

It's the approach that fits a business that charges for services and has no inventory or complicated receivables. When you set up your invoicing, it's enough for each invoice to have its matching payment identified on the statement, and with that your sheet and your bank speak the same language.

How to keep it without overspending

The "system" can literally be a spreadsheet with those five columns. What makes the difference isn't the tool but three disciplines:

1. A business account separate from yours

It's the foundation of everything. If business and personal expenses come out of the same account, no bookkeeping will save you: mixing them (what's called commingling) erases the line between you and the LLC. You need your EIN and a bank account in the company's name before you can keep anything meaningful.

2. Keep the proof for every movement

Invoice issued, expense receipt, transfer screenshot. No need to print anything: a cloud folder sorted by month is enough. The record says what happened; the proof proves it.

3. Update on a cadence, not at year-end

Fifteen minutes a month pasting your statement movements into your sheet save you the January all-nighter reconstructing twelve months from memory. Bookkeeping left to pile up is the bookkeeping that fills with gaps.

How long do I have to keep these records?

The general rule under section 6038A is that you must keep records as long as they may be relevant to determine the correct tax treatment of your transactions. In practice, that means holding several years back — don't toss the sheet or the receipts the moment you file that year's 5472.

The reason is simple: if the IRS asks about a movement from two years ago, the burden of showing it is yours. A file sorted by year is the difference between answering in five minutes and not being able to answer at all.

Keeping books isn't for the IRS today; it's for the "wait, what was this?" two years from now. Your future self is the real customer of your spreadsheet.

What your bookkeeping feeds

All this minimum isn't bureaucracy for its own sake: it's what turns your year into the numbers on your filing. Contributions and draws flow into the 5472; the rest supports your position on whether the profit has economic substance and activity connected to the US. Without records, that filing is done by guesswork — and guesswork is how errors and the $25,000 penalty for a botched 5472 take off.

To see how bookkeeping fits within the full maintenance of the LLC — accounts, compliance and renewals — there's the guide to how your LLC works. And the official source for what records a foreign-owned disregarded entity must keep is the IRS Form 5472.