Single Member LLC - Net Profit to Owner Equity for Member Draw

Thanks for getting in touch with the Community, PJBluenose.
 

If you're a sole proprietor, you have to be paid with an owner's draw instead of a paycheck through payroll. This type of account is an equity account used by QuickBooks to track withdrawals of the company's assets to pay an owner.
 

Since you sound like you've already created your Owner's Equity account, you can write a check from it when you're ready to pay the owner.
 

Here's how:
 

1. Use your + New button, then click Check.
2. From the Payee ▼ drop-down list, choose who you want to address your check to.
3. In the Bank Account ▼ drop-down, pick an account you want your money to come from. 
4. According to our Set up & pay an owner's draw article, you'll need to be sure to affect the Owner's Equity account you created.
5. Enter any other necessary information in your available fields.
6. If you'd like to print a copy of the check, you can choose Print check. In the event you'd prefer to print it later, there's a Print later option.
7. Select Save and close.

If you're looking for other options to set up and pay an owner's draw, I'd recommend working with an accounting professional. If you're in need of one, there's an awesome tool on our website called Find a ProAdvisor. 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 creating checks which may come in handy moving forward: Create & record checks
 

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

My question is how do I move net income (profit) to retained earnings? Once I get to retained earnings, I think i have a grasp on what to do there.  I reduce RE, increase OE, and then write a check with a decrease to OE.

Here is what I did, I went to my monthly P&L found out what that month's net income was, created the "Net Income Summary" account > made a journal entry to Decreased NIS and Increased Retained Earnings > Then Decrease RE and Increase Owners Equity.

So far, this is the only way I've found that does what I wanted.

@PJBluenose  Your issue appears to be a misunderstanding regarding what Owner's Equity is.

Although you may have an Equity Account named Owner's Equity, for the purpose of a Single Member LLC, the true Equity is the combination of any amount taken out of Equity (generally termed Owner's Distribution), any amount put into Equity (Owner's Contribution), Retained Earnings, and Net Income.

For Distributions and Contributions, you do have the option to treat them as one account called Owner's Equity, with Distributions decreasing the account and Contributions increasing the account, but said Owner's Equity account can certainly be negative if the Owner has taken more out than they have contributed.

The problems start to arise when the combination of all Equity accounts is negative, though that could still theoretically happen if you take out a lot of Liabilities. The rule to keep in mind there goes back to Assets having to be equal to Liabilities + Equity.

In addition, Net Income automatically transitions, in its way, to Retained Earnings. Net Income is the profit (Or loss) resulting from the current year's transactions. Retained Earnings is the cumulative Net Income and/or Net Losses from prior years. So, it's a matter of the time frame you're looking at, not the nature of the Net Income and Retained Earnings Equity Accounts.

I can't speak to the (normally god-awful) functions of QuickBooks Online, but in short, it's perfectly fine to draw it out of Owner's Equity, even if that should make that specific Equity account show as negative. For instance, writing a Check out of the relevant business account and using the Owner's Equity account as the source account, or whatever equivalent Online came up with in their system.

@PJBluenose  Unfortunately, what you did here in effect is lower your company's apparent profit, and make it seem as if you put an additional investment in the business, rather than draw money out of it.