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H
HollyS7
March 23, 2022
Question

Owners Draw

  • March 23, 2022
  • 1 reply
  • 1 view

What should I classify a transfer from my business account to my personal savings if the money is being held to possibly pay taxes or buy business expenses later?  The Savings account is not listed in QB as a business account as I sometimes use it for personal.  Would classifying my transfer of money be an owners draw?  Would it be considered income to me which may be overstated if I have personally paid for business expenses that have not been reimbursed?  Should I instead consider it a reimbursable business expense so those are incorporated into the P&L and the balance sheet doesn't overstate the owners draw to exceed net profits?  

1 reply

G
giobookkeeping
March 26, 2022

Hey there! Based on your statements, I would recommend categorizing the transfers (to your personal savings held for taxes and business expenses) as an asset in your chart of accounts, given that the money is going to be used by your business in the future. Owners Drawing is used to classify money that you take out for personal use so it wouldn't fall under that given you intend to use the money for the business in the future. 

 

How you would account for that in your personal side would be a bit tricky. You may need to classify that as a liability on your personal accounts (as opposed to income) since that money is used for the business. Ultimately, I recommend speaking with your tax accountant with this to avoid any tax troubles and open a separate business account to store your business tax and savings money. This would make your accounting (both with the business and personal) a lot easier. Good luck! 

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