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coffeemachineman
Level 1

What account do I need to set up for sole trader drawings (ie paying myself)?

 
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Best answer April 08, 2019

Accepted Solutions
john-pero
Community Champion

What account do I need to set up for sole trader drawings (ie paying myself)?

You need an equity account for draw. You need a separate equity account for contributions which could be as simple as a business item you paid from personal funds And you should have a third equity account that tracks your actual ownership. Annually on first of year you would clear draw and contributions to the third equity account.

 

Best scenario is to have these 3 equity accounts as sub accounts of a parent summi g equity accou t that you never post to buthives you an instantaneous picture of your total equity in spite of draws or contributions

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1 REPLY 1
john-pero
Community Champion

What account do I need to set up for sole trader drawings (ie paying myself)?

You need an equity account for draw. You need a separate equity account for contributions which could be as simple as a business item you paid from personal funds And you should have a third equity account that tracks your actual ownership. Annually on first of year you would clear draw and contributions to the third equity account.

 

Best scenario is to have these 3 equity accounts as sub accounts of a parent summi g equity accou t that you never post to buthives you an instantaneous picture of your total equity in spite of draws or contributions

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