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Buy nowI've searched until I'm so confused I can't see straight. I have a checking account set up in QB Desktop with a positive balance. I have no outstanding A/R or A/P. The funds in the account are pure profit. I want to show the majority of those funds in Member Equity so when I do take funds out I can properly record them as expenses or Member Draws.
How do I show, or move, money in the BANK account to the Member Equity account in QB? When I do a transfer from BANK to Member Equity, the ME report shows a negative balance (?). When I do a journal entry to debit BANK and credit ME, the ME balance is right, but it also increases BANK incorrectly.
Example:
Transfer: From BANK, $5000, to ME; BANK plus ME shows the correct balance in the actual bank account, but ME shows ($5000).
Journal: Debit BANK $5000, Credit ME $5000, bank account shows an INCREASE of $5000 and ME shows $5000.
Can anyone help!? And in the future, should I be splitting deposits between BANK and ME if I want a portion to go into each? Thank you in advance for any insight.
Equity is an automatic calculation by QB. Equity is total assets less total liabilities. Equity is value that the business owes you the owner
When you take funds from the company that is an equity draw, and when you put personal funds into the company that is an equity investment
I know what equity is.
When my customer pays their bill and I enter it in QB, it shows the money in my bank account on the chart of accounts. I’m asking how to move -or show - part of that bank balance in the member equity account on the chart of accounts.
(Then, when I take a draw, I know to use the member draw account.)
Yes, I know what equity is. Thank you, but that’s not my question.
when my customer pays an invoice and I enter the payment in QB, the money shows in my bank account in the chart of accounts. My question is how do I move, or show, a portion of my bank account balance to the members equity account in the chart of accounts?
I know to use the member draw account whenever I take a draw or distribution. But I need the money to show in member equity before I do that.
I think @Rustler 's point was that you don't move it to equity. If the cash in your bank account is, in fact, equity, it will be in the equity section of your balance sheet already - you don't move it there. It will be listed in your equity section in net income for the current fiscal year and in retained earnings for all previous years. If you attempt to take out $5K in cash by debiting equity and crediting your bank account, and that causes your total equity to go negative, you do not have sufficient equity in the business to pull it out.
So if I’m understanding you, since the money showing in the BANK account in the chart of accounts is already my equity (there are no expenses or liabilities), there is no reason to move it to the Member Equity account in the chart of accounts? And I should just enter any draws against Member Draws?
I guess I’m confused as to why there’s a Member Equity account if it’s not needed. But if it’s not, great! For info, it is a sole owner LLC, so not using the Owner Equity account would make sense. I just want it to line up correctly at the end of the year for taxes.
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