I converted my sole proprietorship to a LLC and took the S-election effective 3/23/2012. My problem is that because a lot of my annual income was received in the first two months of the year, my expenses plus draws/distributions exceeded income for the period since the LLC/S-corp was created.

Specifically, between 1/1/12 and 3/22/12 the company had income of $66K and between 3/23/12 and 12/31/12 income was $73K. Expenses were $12K and $62K, respectively, and draws were $22.5K and $37.5K.

I don't understand how to set up my initial balances for the LLC/S-corp. Is there a way to offset some of the income received in the first 2 1/2 months by the draws taken in the last 9 1/2 months?