Categorization of Money Given to a Friend

Ugur01 · ‎February 16, 2023

Hello,

A friend of mine needed money. I gave the amount (3000 USD) he needed from the company account to my friend. This is not a donation, nor did I give it as a loan and I will not take it back.

How can I categorize this amount?

Rainflurry · ‎February 16, 2023

@Ugur01

Whether you're a sole proprietor (SP), partnership, or S-corp, it is a reduction in equity. If you're a SP, record it as Owner's Capital or Owner's Draw. If you're a partnership, record it as a Partner Distribution. If you're an S-corp, record it as a Shareholder Distribution. If you're a partnership or S-corp, distributions need to be made in accordance with your partnership agreement or shareholder ownership percentage.

View solution in original post

Rainflurry · ‎February 16, 2023

@Ugur01

Whether you're a sole proprietor (SP), partnership, or S-corp, it is a reduction in equity. If you're a SP, record it as Owner's Capital or Owner's Draw. If you're a partnership, record it as a Partner Distribution. If you're an S-corp, record it as a Shareholder Distribution. If you're a partnership or S-corp, distributions need to be made in accordance with your partnership agreement or shareholder ownership percentage.

FritzF · ‎February 27, 2023

Hi again, Rainflurry.

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

Keep safe and have a great rest of the day.

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Categorization of Money Given to a Friend