I am using GnuCash to handle accounting of my LLC. The LLC pays dividends to me as shareholder. I have read the mailinglist and it looks like one should either close the books (which is generally not recommended) or just create a Dividends account under Equity, which is negative and gets more negative as more dividends are paid.

The second option works actually very well from my point of view, with the only problem being that Equity becomes negative in the account overview (but is still correct in balance sheet and other reports).

My idea would be to have a virtual "retained earnings" account which can be placed under Equity and with no allowed transaction (placeholder) but which shows the difference between income and expense and thus offsets the dividends account giving a correct amount of equity in the account overview.