What category I have to use for the money I pay my seft in Intuit quickbooks online. My company is an LLC and I have no employees.

Good morning, @blackwoodfl. 

Thanks for posting your question here in the Community. 

Each business has a unique set, so I recommend consulting with an accountant to ensure that your books are accurate. 

Some business owners pay themselves a salary, while others take an owner's draw to compensate themselves. You may use these methods. If so, you can refer back to this article as it has additional information with how to pay yourself in a Partnership in QuickBooks Online (QBO): Salary or Draw: How to Pay Yourself as a Business Owner

If you have any more questions or concerns, please don't hesitate to comment below. Have a safe and productive weekend ahead!

@Kendra H 

Though I know you, and any of the other intuit employee's, will not say one word, the article you referenced,
https://quickbooks.intuit.com/r/payroll/salary-or-draw-how-to-pay-yourself-as-business-owner/
is so full of mis-statements and confusing statements that it should be deleted permanently and the author fired.

@blackwoodfl 

For anyone else reading, how you get paid as the business owner depends ONLY on how you file your federal taxes.

If you use a Schedule C or Form 1065 - the owner MUST use equity draws. Only a c- or s-corporation uses payroll for working owners, in fact a c- or s-corporation must use payroll for working owners.

@Rustler I know this is old and I hope you're still around to see it and comment. I help a relative with books and I have continued to enter transactions in the way my predecessor did, though I know much of it isn't technically correct. The CPA who prepares the tax forms sorts through it at the end of each year. 

But, I'd like to clean up the books. Because the sole owner has been pulling a profit (it's an LLC) for several years, he pays himself each month - the amount varies. I have always entered this as a credit to cash and a debit to his equity account (same as my predecessor). But this has resulted in a very negative equity account over the years as he hasn't contributed any personal money in that time.

My guess is that the tax accountant views the equity account as an owner's draw account. But I'd like to clean up these books and have things be recorded correctly. Do you have any suggestion? Should I create an owner's draw account and make an entry to shift the equity balance to owner's draw?

Does retained earnings play in here? Should I be using an end of year entry to shift net income to retained earnings and then start pulling his draws from retained earnings? Thank you for any advice!

@sunnymountain 

Intuit took a short cut when they set up the books for a sole proprietor, and that causes some issues.

Retained earnings is last years net profit, you do not need to do anything, it is automatic.

If you open the chart of account and double click on the owner equity account it will come up as a report rather than an account register. That account, though titled as owner equity is really retained earnings. You should see entries for each years net profit in that report.

I suggest for sole proprietors and partnerships the owner/partner equity accounts look like this:

[name] Equity (do not post to this account it is a summing account)

>> Equity ( first of the year roll up drawing and investment into this account as well as retained earnings)

>> Equity Drawing (record the value you take from the business here)

>> Equity Investment (record the value you put into the business here)