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Best answer February 23, 2021
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Hello, moving-forward.
I've got you covered. I'll ensure your owner withdrawals are correctly recorded in QuickBooks.
When setting up an owner's draw, you'll want to set it up as an equity account instead of an expense.
Create a new account for the owner's draw and set it up as an Owner's Equity account. Inactivate the Compensation of Officers account if necessary.
I take it that you've already entered the withdrawal as an Expense transaction. You'll want to delete it then process the draw as a check and enter it under the equity account.
To delete the expense transaction, simply open it, click the More menu then select Delete.
Next, process the draw through a check:
- Click the + New button.
- Select Check.
- Choose the Bank Account where your money will be withdrawn.
- Under Category, select the Owner's Equity account, then enter the amount.
- Add other details of the check such as reference number, memo, etc..
- Once done, click Save and close.
A reference for the steps can be found here: Set up and pay an owner's draw.
Also, an accountant will be able to shed some more ideas about recording this. If you need to know how these steps work on the accounting technicalities, I'd recommend consulting with one.
This won't show up under your Profit and Loss report. Instead, you'll want to run the Balance Sheet.
Need to run reports for the transactions or other records? Check out our guides from the Reports topic page.
I'll help out again if you have more questions recording other transactions. I'm also open to address any other concerns you might have for QuickBooks Online.
Hello, moving-forward.
I've got you covered. I'll ensure your owner withdrawals are correctly recorded in QuickBooks.
When setting up an owner's draw, you'll want to set it up as an equity account instead of an expense.
Create a new account for the owner's draw and set it up as an Owner's Equity account. Inactivate the Compensation of Officers account if necessary.
I take it that you've already entered the withdrawal as an Expense transaction. You'll want to delete it then process the draw as a check and enter it under the equity account.
To delete the expense transaction, simply open it, click the More menu then select Delete.
Next, process the draw through a check:
- Click the + New button.
- Select Check.
- Choose the Bank Account where your money will be withdrawn.
- Under Category, select the Owner's Equity account, then enter the amount.
- Add other details of the check such as reference number, memo, etc..
- Once done, click Save and close.
A reference for the steps can be found here: Set up and pay an owner's draw.
Also, an accountant will be able to shed some more ideas about recording this. If you need to know how these steps work on the accounting technicalities, I'd recommend consulting with one.
This won't show up under your Profit and Loss report. Instead, you'll want to run the Balance Sheet.
Need to run reports for the transactions or other records? Check out our guides from the Reports topic page.
I'll help out again if you have more questions recording other transactions. I'm also open to address any other concerns you might have for QuickBooks Online.
I appreciate you for doing the steps provided above, @johnh-321. Let me chime in and help handle the negative balance in your Owner's Equity account.
We can create a journal entry to zero out the balance at year-end. To proceed, here's how:
- Click the + New button.
- Choose Journal entry.
- On the first line, select an account depending if you need to debit or credit the account and enter the amount in the correct column.
- On the next line, choose the other account you're moving money to or from and enter the same amount in the opposite column.
- Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other.
- Input information in the memo section so you know why you made the journal entry.
- Lastly, click Save and close.
With regards to the account to use, I recommend consulting an accountant for proper guidance. This is to ensure that your recording is accurate.
Additionally, let me share this article to help set up an S Corp that includes adjustments as well when there is prior payroll you need to correct: Set up S-Corp Owner's Health Insurance.
Please tell me if you need anything else or concerns with managing the Owner's equity in QuickBooks. I'll be happy to help.
