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My business is taxed as an S-Corporation. I would like to have accurate P&L statements and be sure that all my transactions balance on reconciliation after entering member withdrawals.
I see there are categories for Owner's Equity and Owner's Withdrawals, both categorized as equity. There is also a "Compensation of officers" account under Payroll Expenses.
When I enter the money I've withdrawn from my bank account as an expense classified as compensation of officers, my reconciliation works out perfectly. However, my P&L seems to be thrown off.
How do I correctly enter owner withdrawals? Should they be entered in both equity and expenses?
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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:
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.
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jamespaul, thank you so much for your help!