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savita-clearnexu
Level 3

Setting up Owner's Draw in QuickBooks Online

Hello there,

 

Presently the Owner's draw account (amount taken out of the retained earnings for personal use|) is set up as an expense account in P&L. I would like this to be set up in the Balance Sheet under Equity - to reflect it as dividend paid or owner's draw?  Can this be done in QBO?

 

Regards

Solved
Best answer September 30, 2021

Best Answers
ZackE
Moderator

Setting up Owner's Draw in QuickBooks Online

Thanks for following up with the Community, savita-clearnexu.

 

You can enter an opening balance for your owner's draw account by editing the transaction causing the balance and changing it to the correct amount.

 

Here's how:

  1. Use your Gear (⚙️) icon.
  2. Go to Chart of Accounts.
  3. Find the account, go it its Action column and click View register.
  4. Locate your opening balance entry, then choose it.
  5. Edit its amount. If you're unable to edit the amount on this screen, in some cases you'll be able to do so by using its Edit button.
  6. Select Save.

 

If you'd prefer to work with an accountant, you can check with them to see if they'd recommend entering a general journal entry to move the balance to its correct account. In the event you're in need of one, there's an awesome tool on our website called Find an Accountant. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

 

I've also included a detailed resource about working with opening balances that may come in handy moving forward: Edit an incorrect opening balance

 

Please don't hesitate to send a reply if there's any additional questions. Have a lovely day!

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4 Comments 4
BettyJaneB
QuickBooks Team

Setting up Owner's Draw in QuickBooks Online

It's nice to see you here in the Community, @savita-clearnexu.

 

I'm here to share some information about managing owner's draw in QuickBooks Online.

 

When recording an owner's draw in QuickBooks Online, you'll need to create an equity account. This will handle and track the withdrawals of the company's assets to pay an owner.

 

Know that you can select the equity account when creating a check for the owner. This way, the said transaction will show up under the Equity account of your Balance Sheet report.

 

To create an Equity account:

  1. Select the Gear icon at the top, and then select Chart of Accounts.
  2. In the Chart of Accounts window, select New.
  3. From the Account Type drop-down, choose Equity.
  4. From the Detail Type drop-down, choose Owner’s Equity.
  5. Enter an opening balance.
  6. Select Save and Close.

When paying the owner or your business partner, you can create a check. 

 

Here's how:

  1. Select + New.
  2. Click on Check.
  3. Choose the bank account where your money will be withdrawn.
  4. Select Print later if you want to print the check.
  5. Fill in the check fields. In the Account field, be sure to select Owner's equity you created. The memo field is optional. It appears in the register, on printed checks, and on reports that include this check.
  6. Select Save and Close or Save and New to write another check.

For more details about this process, please see this link: Set up and pay an owner's draw.

 

You can always run the Balance Sheet report to view all the equity's total including your company's net income for the financial year to date.

 

For your reference, I'm also adding here some articles that you can check out about adding a partner to your books, or recoding an owner's contribution:

I'll make sure you're all set. Feel free to get back to me if there's anything else I can assist you with. Have a lovely day!

savita-clearnexu
Level 3

Setting up Owner's Draw in QuickBooks Online

Hi Betty

 

The owner's draw account in the P&L already carries a certain amount.  I would like this to be transferred to the account I create under equity account. I do not presently have an opening balance to the owner draw account.

 

regards

ZackE
Moderator

Setting up Owner's Draw in QuickBooks Online

Thanks for following up with the Community, savita-clearnexu.

 

You can enter an opening balance for your owner's draw account by editing the transaction causing the balance and changing it to the correct amount.

 

Here's how:

  1. Use your Gear (⚙️) icon.
  2. Go to Chart of Accounts.
  3. Find the account, go it its Action column and click View register.
  4. Locate your opening balance entry, then choose it.
  5. Edit its amount. If you're unable to edit the amount on this screen, in some cases you'll be able to do so by using its Edit button.
  6. Select Save.

 

If you'd prefer to work with an accountant, you can check with them to see if they'd recommend entering a general journal entry to move the balance to its correct account. In the event you're in need of one, there's an awesome tool on our website called Find an Accountant. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.

 

I've also included a detailed resource about working with opening balances that may come in handy moving forward: Edit an incorrect opening balance

 

Please don't hesitate to send a reply if there's any additional questions. Have a lovely day!

Explorz
Level 1

Setting up Owner's Draw in QuickBooks Online

Hello, I'm trying to set up an Owner Draw Account but the instructions given don't match with what I'm seeing in the Online Quickbooks interface.  I get as far as clicking "New" under the chart of accounts, but there isn't any "Account Type" dropdown where I can choose Equity.  And therefore no "Detail Those" where I could choose Owner's Equity"

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