A contact or a relationship?

Two features sit next to each other on the client Overview tab and are constantly mistaken for one another. The difference is worth two minutes, because getting it wrong is what produces a record that reads Owned by Barbara Sanchez directly above No contacts yet.

A contact is a person attached to one client. The taxpayer, the spouse, the bookkeeper, the attorney you email once a year. A contact is somebody you communicate with.

A relationship links two client records. This LLC is owned by that individual. This trust issues a K-1 to that person. A relationship is structure you record.

The test that settles almost every case: are you describing somebody you'd email, or something you'd put on a return? The first is a contact. The second is a relationship.

Why a joint return shows two contacts and one client

A married couple filing jointly is one client record with two contacts — a Taxpayer and a Spouse.

That's one return, one engagement, one invoice, one portal login story. Splitting them into two client records means two of everything and a joint return that belongs to neither.

So the couple's own relationship to each other doesn't need a relationship row. The Taxpayer and Spouse contact slots on the Contacts card already say it, and that's what tax autofill reads.

Where ownership belongs

Ownership is recorded as a relationship, and the side that holds the stake is the side the relationship comes from.

That has one consequence firms hit immediately: an individual who owns an entity needs their own client record. Relationships run between two clients, so there is nowhere to hang a stake held by a person who exists only as a contact.

Two spouses who each own part of the same LLC therefore look like this:

• David Phillips — a client record — is owner of Phillips Holdings LLC, 60%
• Marion Phillips — a client record — is owner of Phillips Holdings LLC, 40%

Two relationships, each with its own percentage, read from Phillips Holdings LLC as Owned by David Phillips and Owned by Marion Phillips.

If you've entered the couple as one joint client, their combined stake is one relationship at 100% — which is correct for the return and wrong the day you need the split. Recording them separately is a decision about what you'll need later, not about how they file.

An entity owning an entity is normal

Nothing about relationships assumes a human on either end. An S-corp owning an LLC, a holding company above an operating company, a trust holding shares — all ordinary, all recorded the same way.

is parent entity of exists for exactly this, and reads back on the subsidiary as Subsidiary of. Use is owner of when there's a percentage worth recording and is parent entity of when the point is the structure rather than the stake.

Both directions, without entering it twice

A relationship is entered once and shows on both records, phrased correctly from each side. Enter Phillips Holdings LLC is owned by David Phillips and David's record reads Owner of Phillips Holdings LLC without anybody typing it again.

This is why the type picker reads as a sentence — you're choosing the phrase that completes this client __ that client. Read it aloud before saving and you won't record one backwards, which is the other common mistake here.

When one offers you the other

Adding an owner, officer, trustee or beneficiary relationship where the other side is an individual will offer you that person as a contact on this client — prefilled and ticked, and you can dismiss it.

That's the gap this exists to close: recording that Barbara Sanchez owns the firm's client doesn't, on its own, give you a way to email her. Accept the offer and she becomes a contact too.

It's an offer rather than an automatic write, because not every owner is somebody you correspond with — a passive shareholder, an estate, a parent company. Nothing is created until you say so.

Notes and limits

• A relationship needs client records on both sides. A person who is only a contact cannot hold one. If you need to record their stake, add them as a client first.
• Ownership percentages are not checked against each other. Three owners at 50% each will save. It's a record of what you've been told, not an audit, and nothing warns you.
• Relationships don't drive tax calculations. They document structure for the people reading it. They are not a consolidation, an allocation, or a K-1 engine.
• Relationships and groups are independent. A relationship doesn't create a group and joining a group doesn't create relationships. Use a group to organise your work; use a relationship to record structure.
• A contact can be on several clients; a relationship is always exactly two. One bookkeeper serving four clients is one person with four contact roles — see Contacts and people.