Accounting rules for one owner, multiple LLC's

Direct payment of one LLC's expenses from the bank account of another is not going to be acceptable unless these are generally shared costs and they are ultimately split out among the businesses. However from the way you have described it, the brothers appear to be using whatever bank account suits them at the time. In my view, it is a unusual setup to have, and I think the authorities in whatever jurisdiction you are in, are likely to view it with a lot of suspicion.

From your point of view it is going to be at the very least a messy bookkeeping exercise with the possibility of re-journaling entries on a regular basis as you are notified of the "desired" treatment and ownership of any particular expense. You might want to consider how this sits in relation to the reward you will be getting ?

Your two main issues is how to record and is it legal?

How to record? A lot of inter-company loans. Also known as "Due to/Due From" accounts. These accounts always need to be in sync, and one for each company to another company (so in your example each company will have 5 accounts).

Legal?

Inter-company loans, yes they are, however they may incur wrath without interest being accessed (check with your CPA).

As far as "under the table" payments, just as the name stipulates, it may be highly questionable to downright illegal. A business is required to issue 1099 to all LLC/Sole Proprietors for amounts over $600. Also, expenses for over $75 require receipts. On an IRS audit, its possible that these expenses will be disallowed or worse.

Yes, you are correct. They just use whatever account suits them at that time. It is definitely very messy bookkeeping. We have purchased them Quickbooks. They genuinely desire to clean their situation up. I'd like to set them up the right way for 2014 while we go back and record their transactions for 2013.
Right now, I'm recording all the overseas wire transfers to a Quickbooks account called "investment loans". I am placing all their inter company transfers/purchases into an account called "business loans".
They did provide 1099's to all of the people they paid over $600, so I think they're ok there.
My other question is regarding business vehicles. They have a lot of vehicles under different businesses. How legit is it for them to pay for repairs for vehicles that may not even be "paperwork" associated with any of their businesses? How do I check to see if the vehicles are registered with a particular company or is it even a big deal?

As far as wires, you need to be specific which company - I'd go back and make separate accounts per company.

Cars - look at their titles.

Paying for repairs - if you can make a business case, yes you can.

At this point I'd say you need some professional help, a consultant or your firms CPA ( and if that firm can't do it, I'd seek out a new CPA firm).

One-owner LLC's are likely classified as disregarded entities, with income reported on owner's 1040. This would explain the casual accounting approach. The entities may even be grouped & considered as only 2-3 businesses on owners' 1040. Due to/due from accounts are common between small family businesses with common ownership and control. Some of the autos may be used by more than one business. An auto's business mileage may be split between businesses 60/40 or it could vary by year, so registration wouldn't govern. The expense for each auto would be assigned per owner's log of miles driven per year. He should have, or start, one for each car for each year if auto expenses will be deducted. Make sure the LLC forms and fees are correct and current with the state each year. Find or obtain business licenses for each company. Next I would inventory general liability insurance policies and make sure all six companies policies are paid and safely stored. Then just keep chipping away at the accounting. Agree with Wayne above; perhaps plan a few hours with their CPA each month or per quarter to ensure you're on track and structure proper division between brothers in QB.

This sounds like the kind of client that I would "pass" on right from the beginning. They seem to be doing a lot of questionable and even suspicious activity in their business operations, according to what you have described. And it sounds like they may have foreign bank accounts. If so, do you know if they are disclosing this information to the US authorities on an annual basis? This is required by law if they are US citizens. It sounds like they may be hiding income. If you are feeling uneasy working with these brothers because you're not sure you can trust them - that's a bad sign and you do not need to keep them as clients. Use your gut instincts here. Clients that are not a good fit can be terminated. You need to be very careful with this situation. The deeper you get into the muck of trying to figure out what they are doing - the more you are going to regret that you chose to work with them in the first place.