Intercompany transactions accounting: loans, cost sharing and due to and from

An intercompany transaction is money, goods or services that move between two companies you own. Record it in both companies' books on the same day: the company that is owed debits a due-from receivable, and the company that owes credits a due-to payable. The two balances must match every month, and when you consolidate they are eliminated so the group never owes itself.

Updated September 30, 2026 · 5 min read · By the Accountable team

The short version

Every intercompany entry has two sides, one in each company, and the two sides must be equal and opposite.
Keep a separate due-from and due-to account for each other company, and keep loans apart from everyday balances.
Loans, interest, expenses paid for another company, cost shares, management fees and capital contributions each have a standard pair of entries.
Match each pair at month-end, because unmatched balances are the most common reason consolidated numbers do not tie.
Put loans, fees and cost shares in writing, since the IRS can reallocate income between commonly owned businesses.

Every intercompany entry has two sides that must match

When one company you own pays, lends to or bills another, both companies' books change. One records a receivable, an asset, and the other records a payable, a liability. This guide calls the two companies Parent and OpCo. The table lists the seven entries you will use.

The seven intercompany entries, both sides
What happened	Parent records	OpCo records
Loan advance: Parent lends $50,000	Debit loan receivable, OpCo $50,000; credit cash $50,000	Debit cash $50,000; credit loan payable, Parent $50,000
Loan interest: $250 for the month	Debit interest receivable $250; credit interest income $250	Debit interest expense $250; credit interest payable $250
Expense paid on behalf: Parent pays OpCo's $3,000 software bill	Debit due from OpCo $3,000; credit cash $3,000	Debit software expense $3,000; credit due to Parent $3,000
Cost share: Parent pays $10,000 of rent and OpCo's share is 40%	Debit rent expense $6,000 and due from OpCo $4,000; credit cash $10,000	Debit rent expense $4,000; credit due to Parent $4,000
Management fee: Parent bills $2,000	Debit due from OpCo $2,000; credit management fee revenue $2,000	Debit management fee expense $2,000; credit due to Parent $2,000
Repayment: OpCo pays $5,000 of what it owes	Debit cash $5,000; credit due from OpCo $5,000	Debit due to Parent $5,000; credit cash $5,000
Capital contribution: Parent puts in $20,000	Debit investment in OpCo $20,000; credit cash $20,000	Debit cash $20,000; credit paid-in capital $20,000

A loan must be repaid and can earn interest. A capital contribution is equity, so it is not repaid unless the owner takes money out. Choose the right one, and ask your CPA if you are unsure.

Give each other company its own due-from and due-to account

Use named accounts, such as Due from OpCo and Due to Parent, instead of one catch-all intercompany account. Each account then faces exactly one other company, and you can match it to that company's mirror account. Keep loans in loan accounts and everyday balances, such as expenses paid on behalf, in due-from and due-to accounts.

Never net the two. If Parent is owed $4,000 for costs and owes OpCo $1,500 for something else, record both balances. Netting hides the pair that no longer matches.

At month-end, each pair must show the same amount on both sides

After the entries above, with the $5,000 repayment, the balances should agree pair by pair. Here is the proof for the month.

Month-end match of each intercompany pair
Pair	Parent's side	OpCo's side	Difference
Due from OpCo and due to Parent ($3,000 + $4,000 + $2,000 - $5,000)	$4,000	$4,000	$0
Loan receivable, OpCo and loan payable, Parent	$50,000	$50,000	$0
Interest receivable and interest payable	$250	$250	$0

A difference of zero means both companies recorded the same facts. Anything else is an error to fix before you close the month (month-end close checklist).

Mismatches come from five causes, and each has a fix

Why intercompany pairs disagree and how to fix each
Cause	How it shows	Fix
One side never recorded	The difference equals one whole entry	Post the missing side with the original date.
Recorded in different months	The difference reverses the next month	Agree a cut-off: both sides post in the month the money or service moved.
Different amounts	A small difference such as $200, often a fee or rounding	Confirm the amount with the bank or the invoice and correct the side that is wrong.
Wrong account	The pair matches in total but one side is in expense or revenue	Move it to a due-from or due-to account.
Different currencies	The pair differs only by exchange rate	Record the amount in the currency of the loan and agree how you translate.

At consolidation the pairs cancel, but cash never does

When you consolidate financial statements, the due-from and due-to balances, the loan and its interest, and any fee revenue and expense are eliminated, because ASC 810-10-45-1 requires intra-entity balances and transactions to be eliminated. The group's net income does not change. Cash stays, because it is real money in a bank.

Put loans, fees and cost shares in writing

Section 482 of the tax code lets the IRS allocate income and deductions between businesses owned or controlled by the same interests, to prevent tax evasion or to reflect income clearly. So charge a fair amount for shared costs and fees, and write the terms down. StartSmart Counsel lists intercompany agreements for services between affiliated entities, licenses, leases and management agreements among the documents that matter more than the structure itself.

For a loan, the note and the interest rate matter most. They are covered in a loan between two LLCs. Keep a separate bank account for each company too: StartSmart names commingled bank accounts and missing separate accounting as reasons a court may disregard a structure.

Questions founders ask

What is an intercompany transaction?

Money, goods or services that move between two companies under common ownership, such as a loan, a shared bill, a management fee or a capital contribution.

What do due to and due from mean?

Due from is a receivable: the other company owes you. Due to is a payable: you owe the other company. Each pair must show the same amount.

One of my companies paid a bill for another. How do I record it?

The company that paid debits due from the other company and credits cash. The other company debits the expense and credits due to the first. Both entries use the same date and amount.

Are intercompany loans taxable?

The loan itself is not income. Interest is income to the lender and a possible deduction for the borrower when the two companies are separate taxpayers. Ask your CPA how your companies are taxed.

Do I need separate bank accounts for each company?

Yes. Commingled accounts are one of the facts courts use to ignore a company's separateness, and they make the books much harder to match.

One entry posts both sides

In Accountable, open Settings › Consolidation groups and press New intercompany entry. Pick From and To and what it is: expense paid on behalf, cost share, loan advance, repayment, interest, management fee or capital contribution. Preview both sides, then Post. The Intercompany tab names any month where one side is missing.

See multi-entity accounting

Sources, checked September 30, 2026: