What is the proper process in QB to close out these accounts at the end of the year?

@Rustler what are your thoughts on doing this, specifically the closing of net income/retained earnings to partner's equity accounts with respect to cash basis and accrual basis. That # will be different and you can't make an entry for both. I certainly prefer accrual basis but sometimes it's easier to see it on the cash basis, especially as that's what my clients usually file tax returns on.

---

@UMDJeremy wrote:

@Rustler what are your thoughts on doing this, specifically the closing of net income/retained earnings to partner's equity accounts with respect to cash basis and accrual basis. That # will be different and you can't make an entry for both. I certainly prefer accrual basis but sometimes it's easier to see it on the cash basis, especially as that's what my clients usually file tax returns on.

---

You have no choice, QB is accrual accounting

it only reports on cash basis

When you create the Journal entry you're just bringing the balance back to zero for the equity account at the end of the year?

I'm only asking because read to setup a 2017 account and then another for 2018 for equity, but now in 2019 the 2017 account still shows balance in my balance sheet.

@Rustler Props and cheers, this solved it for me. Thank you.

As I understand your method, for each partner we're taking the last year's worth of draws and investment and transferring them to a new equity account. In effect, the draw and investment sub-accounts now only show the current year's activity, which is exactly what I needed for doing my 1065.

This new equity account accrues the equity for each partner at the end of each year, so for now I've called it Accrued Equity.

I found it useful to keep it as a separate account, separate from the draw and investment sub-accounts. Those are now together in as sub-accounts to a main account I now call Current Equity. That way the Current Equity totals go straight across into my Form 1065 Schedule K.

Those terms work for me. Yet are there more accurate/correct terms for what I'm calling Accrued Equity and Current Equity?