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nbish11
Level 1
posted
‎January 02, 2021 11:36 PM
last updated ‎January 02, 2021 4:36 AM

Classify bank transactions for owner's drawings & owner's investments

Hello all,

 

I am new here and to Quickbooks and need a bit of help, please.

 

I currently run a sole trader business structure in Australia using Quickbooks Online and am having difficulty on how to categorise transactions relating to owner's equity in my banking feed. When I first started using Quickbboks Online everything was managed through my personal account, but now, I have a separate business account. My business is doing really well now, to the point that I can pay myself a steady 'wage' per week. I do this by transferring money from my business account to my personal account.

 

My problem is this, though, I can record the transfer in one of two ways and I do not know which one I should choose. In my banking feed under my business account, I can either:

  1. select the transaction, click the Categorise option, choose Expense as the transaction type, myself as the Supplier/Customer and Owner's Equity:Owner's Draw as the category, with GST set as Out of Scope (0%); or
  2. select the transaction, click the Record as transfer option, and set the Transfer account to Owner's Equity:Owner's Draw.

I feel like the second way is the correct way, but am just too unsure. Could someone please help me on this?

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2 Comments 2
bonny__
Level 2
‎January 05, 2021 02:03 PM

Classify bank transactions for owner's drawings & owner's investments

Hi nbish11,

 

Both ways that you've suggested can work to record your owners' drawings, as QuickBooks considers Expense transactions and Transfers to both be "money out" transactions. 

 

The first option you mentioned would record the wage as an expense from your business, to yourself, which may make more sense in your situation than the second option, which is more used for moving money between bank accounts.

 

If you have an accountant or bookkeeper, I would recommend consulting with them on how they prefer this to be recorded.

 

Bonny

 

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clradnim1
Level 2
‎January 26, 2021 04:31 PM

Classify bank transactions for owner's drawings & owner's investments

Hi Nbish

 

As a Bookkeeper I would use option (2).  Transfer to Owners Drawings, out of scope (GST Code)

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