@Rustler wrote:
For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), 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
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here
I assume the 1st sub-account called just Equity is where you transfer the partner's share of the year's net income or loss from Retained Earnings, once the books are finalized at year end. And also zero out the other 2 sub-accounts.Right?
So if the sum of draws less investments, is the same as the net profit, the balance in all the accounts will be zero. I know it's unlikely but in principle. And the balance in Retained Earnings will be an offset to Net Income.
