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Level 4

Profit

I am using QuickBooks Desktop Premier Contractor Edition 2019

 

When I've needed to purchase some things for myself I have assigned the transactions to my Equity Draw Account. When I run a Profit & Loss report that amount from Equity Draw is subtracted bringing My net profit

amount down. Here is my question:

Technically, isn't my net profit the amout of net profit from the P & L  combined with the total from my Equity Draw acct. since me and my company are  1 in the same. How can I show this amount in a report if possible.

Solved
Best answer December 13, 2020

Best Answers
Community Champion

Profit

The two parts of your explanation do not quite jibe. There may be an issue with how your draw account is set up.

 

Equity in any way shape or form, like assets, should never appear in a P&L statement. It is not an expense. Equity movement, draw in this case, is an advance to you against your eventual year end pass through profit.  It does not deduct from the profit. You could just as well leave the profit in the company and pay yourself nothing, if you can afford to. All the draw, or contribution, does is change your total equity in your company. Same thing happens with your profit(or loss) it passes through to your personal return but has an effect on your equity. Profit raises equity. Drae reduces.

 

Say you made 10k profit but withdrew only 5k. All said and done you equity ownership in your company went up 5k

View solution in original post

3 Comments
Community Champion

Profit

The two parts of your explanation do not quite jibe. There may be an issue with how your draw account is set up.

 

Equity in any way shape or form, like assets, should never appear in a P&L statement. It is not an expense. Equity movement, draw in this case, is an advance to you against your eventual year end pass through profit.  It does not deduct from the profit. You could just as well leave the profit in the company and pay yourself nothing, if you can afford to. All the draw, or contribution, does is change your total equity in your company. Same thing happens with your profit(or loss) it passes through to your personal return but has an effect on your equity. Profit raises equity. Drae reduces.

 

Say you made 10k profit but withdrew only 5k. All said and done you equity ownership in your company went up 5k

View solution in original post

Level 4

Profit

What I mean is I need to show my net income for the year. But the P&L statement doesnt really tell that. It tells my company's net income.  To show My net income wouldn't it be the equity draw plus the net income of my company. It's a sole proprietorship.

Moderator

Profit

Thanks for getting in touch with us again, @the_tile_setters,

 

To track a sole proprietor's income in QuickBooks, you may run two different reports. One for the Equity and the regular financial report to get the business' income. 

 

First run a report for the Equity Account to show the draws of the owner. To do that:

 

  1. Go to the Lists menu the choose Chart of Accounts.
  2. Find the Equity and right-click on it.
  3. Choose QuickReport to open the list of entries under the equity account.

 

Next is opening the Profit and Loss report to get the accurate Net Income data. You can go to the Reports menu and you will find the financial reports under Company & Financial.

 

You can then export the reports in Excel if you want to combine the data. Just use the Excel icon at the top to transfer the information to a worksheet.

 

I'll be adding some report resources here to help you further:

If you need anything else, let me know in the comment. I'll be right here to assist you anytime. Have a nice day!

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