Owner's Equity account just keeps going into the negative?

Electrician · ‎December 10, 2018

I have a small LLC contracting company.

In Quickbooks Chart of Accounts, I have an Owners Equity account and under that is an Owners Draw account.

The Owners Equity account had up to $10,000 because I purchased a lot of stuff for many company when I started it. But then I started making money and taking it out of the company via Owners Draw, which shows in red as a negative number.

The Owners Equity account is also a negative number, and it just keeps growing.

So is this setup right? As I make more and more money and take money out to pay myself, the Owners Equity account will just keep getting more into the negative? Hundreds of thousands, millions (hopefully :-)?

SkinnyRaven · ‎December 10, 2018

Yes, the draw account is an ongoing record of funds taken from the business.

View solution in original post

SkinnyRaven · ‎December 10, 2018

Yes, the draw account is an ongoing record of funds taken from the business.

Teri · ‎February 07, 2019

Equity accounts are normally credit balance. Drawing accounts are normally debit balance account.

KLW2019 · ‎August 30, 2019

Draws should be recorded as distributions rather than negative equity.

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Owner's Equity account just keeps going into the negative?