Please guide that what is the difference between partner's equity and partner's contribution accounts. When partner's equity will be used and when partner's contribution account will be used. Will be better if reply with an example.
For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)
[name] Equity (do not post to this account it is a summing account)
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here
Then when you deposit personal funds into the business, you use equity investment as the source account for the deposit
If you take money, then write a check and use equity drawing as the expense (reason) for the check
Thanks for your input.
Please note that the QBO trial version I am using doesn't contain EQUITY account as Account Type but the 'Owner's Equity' account. After the selection of 'Owner's Equity' account, I get list of detail type. Here I am getting two accounts (Partner Contribution and Partner's Equity).
Now I am confused that which one will be used to reflect the investment from the partner? I have also attached a snap shot. Hope my query is more clear now.
Kindly review and guide accordingly.
Good day, Abdul Rehman.
You'll want to select each detail type to see the definition. Then, choose either Partner Contribution or Partner's Equity depending on your situation.
I'm also adding this article on how to add an owner or partner to your books.
Please don't hesitate to comment on this thread if you have any additional questions related to this. Thanks.
I am working on my posted query and will update you soon.
Meanwhile, kindly note that in community, any one may answer the query. But is there any indication (with the user) that the user is from QuickBooks support team and one can implement the suggested solution without any fear. E.g. I am seeing 'QuickBooks Team' caption with your name (but not with Rustler name). Is this the sign that you (such user) belongs to QuickBooks support team?
Yes, I'm part of the QuickBooks Support Team, Abdul Rehman.
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