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Owner deposit and withdrawal of money into business.

One of the owners deposited money from her personal account into the business to cover immediate expenses that came up. We paid the owner back a portion of the money, and the business has a balance left over for the other portion.

I need to know the best way to record this in quickbooks without causing too much of a negative effect within our books. From what I'm reading, using an equity account would work?

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Best answer 12-10-2018

Accepted Solutions
Established Community Backer ***

Yes, equity would work as long as the company is not taxe...

Yes, equity would work as long as the company is not taxed as a c- or s-corp, if it is a corporation, then you have to use a current liability account to show what the company owes her.

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
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

Then at the start of the new year, this structure allows me to roll up last years investment and drawing into the equity sub account - that way I can easily see the investment and withdrawals for the current year.

View solution in original post

2 Comments
Established Community Backer ***

Yes, equity would work as long as the company is not taxe...

Yes, equity would work as long as the company is not taxed as a c- or s-corp, if it is a corporation, then you have to use a current liability account to show what the company owes her.

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
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

Then at the start of the new year, this structure allows me to roll up last years investment and drawing into the equity sub account - that way I can easily see the investment and withdrawals for the current year.

View solution in original post

Frequent Explorer **

Re: Yes, equity would work as long as the company is not taxe...

For Equity drawing, is the detail type "partner distribution"? 

For Equity Investment, is the detail type "partner investment"?


Thanks for any help to understand this better. 

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