I'm a sole member LLC.
I've got an "Owner's Equity" equity account set up and any time I Take money from my pocket and spend it on the company, I log it in this account and categorize it properly for tracking purposes.
When I want to take money from the company, I created an "Owner Draw" equity account. Do I write myself a check and use the "Owner Draw" account? I noticed that if I do that, the draw account goes into a negative balance. I feel like I should not have created a draw account and instead, wrote a check against the "Owner's Equity" account.
Which is correct?
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I had the same problem - QB Pro not letting me add a sub account to my 320 Owner Equity Account .....
So I set up a totally separate account with sub-accounts under the Equity portion of my chart of accounts as follows:
310 / Owner Investments
310-1 / Owner Contributions
310-2 / Owner Draws
That way, my accountant can clearly know my intent with respect to my postings.
Hello there, @DnR75040.
I'm here to help provide some details about setting up Owners Equity sub-account in QuickBooks Desktop.
When you create a company, there are specific accounts that QuickBooks creates by default and other special accounts that you can't delete, merge, or set up a sub-account. These accounts are:
What you can do is create another separate Owners Equity account, and from there you can set up a sub-accounts.
For additional reference, you may want to check this article to understand QuickBooks Chart of Accounts.
Please know that you're always welcome to post if you have additional questions about setting up an account. I'll be around to help. Have a good one.
I am a QB newbie. I haven't done accounting in years. I just started working for a small LLC. The owner has Members Equity & Members Draw accounts set up. My question is, What is the posting process when the owner transfers funds from his personal banking acct to the business ckg acct, but he is wanting it to show as Member Contributions. (He has 4 bank accts set up. One is for AR, general ckg, reserve acct, and personal. And there are only 3 Equity Accts set up: Opening Bal, Members Draw and Members Equity.)
He is funding his business from his personal account but the transactions aren't set up to show it tied to the equity accounts and I can't figure out how to correct it. When he is transferring money from the personal to the company ckg acct, doesn't it need to be filtered through the equity account? It is only showing up between those 2 accounts and no other record for the equity account.
This is helpful. I have an LLC, 2 partners. We each have our Equity account divided like this:
--Partner1 Equity - Contributions
--Partner1 Equity - Distributions
--Partner2 Equity - Contributions
--Partner2 Equity - Distributions
So at the end of the year, when i want to zero out the distributions (our "Draw" accounts), i would then create journal entries, with Debits to which accounts? I know to credit the Draw/Distribution accounts but i'm confused about the Debit.