Hello, Brett. I am glad that you have joined our Community. I have a helpful tip to share with you regarding recording the money transferred for your payment. This will help you complete your tasks smoothly within QuickBooks Online (QBO).
If you work as a sole proprietor, your compensation will typically come as an Owner's draw rather than a regular paycheck processed through payroll. We will have to set up an Owner's draw account. An Owner's draw account is an equity account used by QuickBooks Online to track withdrawals of the company's assets to pay an owner.
To create an equity account, follow the steps:
- Click the Gear icon.
- Select the Chart of accounts under Your company.
- Click the New button.
- Choose Equity from the Account Type dropdown.
- From the Detail Type dropdown, select Owner's Equity.
- Enter an opening balance.
- Hit Save and Close.
When it's time to compensate the owner, you can generate standard checks in QuickBooks instead of using the payroll feature. Ensure to select the Owners' Equity account you established in the specified step to track the transaction accurately.
Follow the steps below to write a check from the Owner's Equity account:
- Go to + New, then select Check.
- Select who you want to address from the Payee dropdown.
- From the Bank Account dropdown, select the account you want the money to come from.
- Enter the amount you want to draw on the line with the dollar sign.
- In the Account column under the check image, select the Owner's Equity account you created.
- Click the Save and Close.
If you need to pay your account from Equity account, we record a reimbursement as an expense in QuickBooks Online (QBO). Please visit this article: Pay for business expenses with personal funds.
Furthermore, you'll need to add the owner as a vendor in QuickBooks since you're paying the owner. I suggest consulting an accountant if you need further guidance on how specific transactions affect your accounts. They can offer expertise tailored to your business, so you get the best advice on managing your business finances. Do you want to have one? Visit this article: The ProAdvisor Program.
I'm adding a couple of related articles below to guide you about adding a partner to your books or recoding an owner's contribution:
Lastly, you can run reports in QuickBooks Online to get a comprehensive overview of different aspects of your business. Check out this article for more info: Run reports in QuickBooks Online.
If you need further assistance about setting up an owner's draw in QuickBooks, please feel free to respond to this post. I would be delighted to help you again. Wishing you a wonderful day ahead!
