I am setting up quickbooks first time. I want to set up an equity account to categorize partner's monthly draws. I have looked and understand RE equals last year's profit, so I went to my tax return last year and found "ordinary business income" and "income(loss) reconciliation" amounts which are different. It looks like the difference is charitable contributions but what do I know? anyway, not sure which number to use for my beginning balance for the RE account? I have tried to find it on here, but have not been successful. Thanks!
RE is last years net profit, that may or not be the same as last years taxable net profit when filing taxes.
typically you distribute RE to the partner equity accounts after the first of the year with a journal entry debit RE, and credit partner equity for his share
When setting up a QB file for the year, that should already be done so there is no starting balance for RE.
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