I'm Using Quickbooks Desktop Premier Edition 2021 and am trying to close the books for 2021 for our LLC which has 3 partners. I have a 3 account structure setup for each partner (Draw, Contributions and Equity) which sums to parent Capital account for each partner. I recorded a journal entry on Jan 1, 2022 to debit contributions and credit equity for each partner. Then I wanted to record a journal entry, again on Jan 1, 2022, to distribute 2021 net income to each partner's equity account by debiting retained earnings and crediting partner equity for each partner's share. However, Quickbooks is giving me the following warning message:
"You are about to post to the Retained Earnings account, "Retained Earnings". Quickbooks uses this account to track profits from earlier periods that have not yet been distributed. This is an automatically generated account and in most cases you should post to another equity account".
Question: Is there some other approach I should take in QB to distribute the Net Income to partner equity accounts, or do I just ignore the error message.
Thanks for any advice!
I am struggling in creating my Equities account for each partners.
31000 - Partners Investments
31001 - Partner 1
31002 - Partner 2
32000 - Partners Draw
32001 - Partner 1
32002 - Partner 2
What I am missing?
Thanks for joining this thread, partner2021.
You can add new accounts from your chart of accounts screen.
In regard to identifying which accounts you may be missing, 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.
Here's how it works:
Once you've found an accountant, they can be contacted through their Send a message form:
I've also included a detailed resource about working with the chart of accounts screen which may come in handy moving forward: Learn about the chart of accounts
Please don't hesitate to send a reply if there's any additional questions. Have a great day!