How to record giving myself a payment from my business account to my personal account so that its taxed and not put as an expense. Im not on the payroll.

Hi @Magdo1970 

If you're not on the payroll (so you're working as a Sole Trader rather than a Limited Company) then you need to classify these payments as Drawings (usually entered as an Owner Equity account).

Essentially, you're making a drawing against the after-tax-profits of the business so there is no tax calculation per se.  At the end of the year, the business profits are calculated & tax paid.  The remainder is Owner Equity (equivalent to your take home / bottom line pay) & this is the pot from which you're taking the Drawings.

Just make sure there is enough in the pot every year to pay the tax.

Hope this helps.

Hi @Magdo1970 and @paul72 . I got the same question and after reading many posts on this I am confused.

What are the steps to transfer money to your own (or the owner's) bank account?

I have set up an Owner's Equity account. Do you really have to write a check to yourself?

Many thanks.

Hi @Walt V 

You don't have to physically write a cheque to yourself but that's the easiest way to record it in QBO because a Cheque in QBO automatically registers against a Bank Account in QBO.

Choose the Drawings (Owner Equity) account as the Category on the Cheque & NOVAT in the dropdown.

In accounting terms, every transaction is (or can be thought of as) a Journal Entry.

It's just that QBO (& every other package) simplifies things by having special types of journal where one column/account is pre-populated.  A Payment (whether that's to Owner or to pay a Bill) is a Journal (a transfer) between Bank Account & the posting account.

If you're using Bank Accounting Matching (I don't personally) you could skip the Write Cheque stage & simply categorise the payment against the Drawings (Owner Equity) Account - again with NoVAT in the dropdown.  This will create the same journal in the background that the Write Cheque method does.

Hope this helps.