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Whats the appropriate way to show a deposit of $30,000 from personal funds into a new business? Owners Equity? Then how do I record 1x withdraw to purchase a business?

To clarify how do I record a 1 time lump sum debit to of $25000 to purchase an existing business?
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QuickBooks Team

Re: Whats the appropriate way to show a deposit of $30,000 from personal funds into a new busines...

Hey @russ8,

 

You'll need to set up an owner's equity account to track your payment to the owner of the business. Let me guide you on how this is done.

 

An Owner's Equity account is used to track the withdrawals from your assets to buy a new business. To create an account, here's how:

  1. Click on Accounting from the left panel.
  2. Choose Chart of Accounts.
  3. Click on New.
  4. From the Account Type drop-down, select Equity.
  5. From the Detail Type drop-down, choose Owner's Equity.
  6. Enter the Opening Balance.
  7. Click on Save and Close.

Once done, you can now write a check to show the expense from your personal funds to the business owner. You can follow the steps below:

  1. Click on the Plus (+) icon.
  2. Choose Check.
  3. Select the bank where the funds will be taken from.
  4. In the Account field, enter the equity account you created.
  5. Enter the other information for the check.
  6. Click on Save and Close.

Also, I still suggest reaching out to your accountant. This way, they can properly guide you on how these can be recorded in your business. They can also help you manage your books.

 

You can refer to this article for more information: Set Up and Pay an Owner's Draw.

 

Don't hesitate to let me know if you have any other questions or concerns. I'll be here to help you.

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Re: Whats the appropriate way to show a deposit of $30,000 from personal funds into a new business? Owners Equity? Then how do I record 1x withdraw to purchase a business?

@russ8 

 

If you were starting a business, then the intuit answer works, but in your question you are buying a business, that is different.

 

when you buy a business you are buying things, assets, receivables, debts, etc so you first need the business balance sheet to determine what you are buying and the value of each.  Then you use your money to "buy" those things at that balance.  Any of the purchase price that is left over is booked to an asset account called goodwill.

 

Deposit the total amount in a cash type account, and use that account to "buy" the parts of the business.

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