Paid-In Capital

Paid-in capital is a bookkeeping total: all the money and property the owner has put into the company since day one, added up. If you contributed $1,000 when you formed your LLC in 2024, $4,000 in 2025, and $2,500 in 2026, your paid-in capital is $7,500. It is a lifetime number that only grows as you invest more, while Form 5472 reports only the contributions made during a single tax year. Keeping both figures straight prevents confusion when filings from different years are compared side by side.

Understanding the difference keeps your filings consistent. Each year's Form 5472, attached to the pro forma Form 1120 due April 15, shows that year's contributions and distributions. Paid-in capital is the backdrop: it tells you, and anyone reviewing your books, how much of the company's cash came from the owner rather than from customers. If the IRS ever compares filings across years, the yearly Form 5472 amounts should add up in a way that matches your records.

Paid-in capital also matters when you take money out. Distributions that simply return your own investment are different in character from distributions of profit, and good records make that easy to show. A founder who put in $10,000 and later withdrew $6,000 can point to paid-in capital to explain that the withdrawal was a return of capital, not untaxed income sneaking out of the US.

For corporations filing a full Form 1120, paid-in capital appears on the balance sheet in Schedule L. Multi-member LLCs track the same idea through capital accounts on Form 1065 and each Schedule K-1, due March 15, which show what every partner has contributed and withdrawn over time. Whatever the entity type, the habit is the same: record each contribution on the day it happens, note whether it was cash or property, and the lifetime totals take care of themselves when filing season arrives.