I have a personal account and a business account set up through the same bank.
My question has 2 parts. When I transfer money from my business account to my personal account to pay myself, how is this recorded on the Bank page? Do I press Add, Find Match, or Transfer when recording this?
When I want to invest additional capital into my company from my personal to my business account, how is that recorded? It is currently recorded as a "Transfer from Owner's Investment"? But how is this different from Owner Investment?
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For a company taxed as a sole proprietor or partnership, I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)
[name] Equity (do not post to this account it is a summing account)
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here
Use the drawing account as the expense for the fund transfer
Use the investment account as the source (from) account for a deposit
It is best if you don't track or link or attempt to reconcile or manage a Personal Bank account in the business data file.
You don't have Transfers. You have Drawings.
You use the bank's site to make Transfers, but that is just avoiding a physical trip to the bank. In the bookkeeping, that is the same as a Paperless check to you from Draw as Equity out.
I was thinking that accounting for my Equity investments and withdrawals would be a longer drawn-out process, but you have made this look so simple. I'm grateful. Thank you very much. I'm guessing that it's the same process regardless if it's in Canada or the USA Rustler?
I am a sole proprietor of a LLC. We have been using the Owners equity classification and it doesn't transfer to the P&L. I need to set up quick books to show the owner has an income for personal loan/refi. The books need to reflect that. Any suggestions?
It doesn't "transfer" to the P&L because it is not a business Expense. That doesn't prevent for showing the Owner has income, because you see the P&L lists Net Income, which is completely owned by the sole proprietor, and the bank should also be asking for the Balance Sheet, so that they can review Draws, and the Statement of Cash Flows, so that they can evaluate Debt and Assets purchased, all of which are done using that same pot of Cash = Banking.
Owner Equity is a Balance Sheet item, not an Income Statement item (P&L).
Your P&L should show your profits, which to a sole prop is the closest equivalent to income (there is no wage).
When recording an investment am I fine only positing to the one equity account "Owners Equity" When I go to do so, I get prompted with a message that says something like about posting to a retained earnings account and I may need to then post to another retained earning account. I am not sure I fully understand this
Hello, I’m having some confusion over the owners draws as well. I have transfers between personal and business accounts. How do I record the transaction from the business account to the personal if it is a personal draw?