Greetings to all,

I have a query concerning expense sharing arrangements. My client currently operates three LLCs, which will soon be held by a C-Corp parent, and each of these LLCs will convert to a single-member LLC (SMLLC). Although the company is small, it is experiencing growth. At present, I am in the process of cleaning up their financial records to segregate expenses, as a significant portion of costs are shared across the entities. These shared costs include web-related software subscriptions, contractor payments, accounting system fees, and other similar overheads.

What is the appropriate methodology for allocating these costs among the entities? Currently, these expenses are being charged to a corporate credit card. All three entities utilize the same software, accounting systems, and contractors to carry out activities that benefit all three.

Additionally, once the C-Corp is formally established, which types of costs can be appropriately borne by the C-Corp without jeopardizing the limited liability protection of the underlying LLCs? I understand that in most states, an SMLLC's owner does not receive substantial liability protection, but my core question is: how should I structure the books to safeguard the legal separation and protect each LLC's limited liability status?

Thank you in advance for your insights!