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info-herpromocod
Level 1

How to categorize money transfer by check between two business accounts

Hi,

 

I have two business checking accounts. I sometimes move money by check between those two business checking account. How should I categorize those transactions? Is it okay to categorize as "Shareholder's Equity: Distributions"?

4 Comments 4
Rustler
Level 15

How to categorize money transfer by check between two business accounts

There is no such thing as equity distributions, there is an equity draw though

 

transferring funds from one bank to another is just moving money, there is no category for that, it is a bank transfer (assuming the two accounts are for the same business)

info-herpromocod
Level 1

How to categorize money transfer by check between two business accounts

Thanks so much for the clear answer.

 

The reason why I brought up "Shareholder's Equity: Distribution" is that my bookkeeper categorized the same kind of transaction as that last year. I will categorize it as "transfer" from now on.

 

She categorized all the money transfers from my business account to my personal account as "Shareholder's Equity: Distribution" last year. Is that correct? Our CPA approved that too. Should I use "Equity draw" instead?

Destiney D
Level 1

How to categorize money transfer by check between two business accounts

What if the transfer in from a sister company? How would you categorize that on both sides? 

Giffola
Level 3

How to categorize money transfer by check between two business accounts

If you are going from a business account to your personal account, then your bookkeeper / CPA is correct as you are removing money from the business.

 

However, your question stated you were making a transfer between two business accounts (assumingly owned by the same business), thus you are not removing money from the business, so it's just a bank transfer.

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