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Anonymous
January 7, 2022
Question

Categorize vs Record as Transfer for Owner's Draw

  • January 7, 2022
  • 1 reply
  • 0 views

For an Owner's Draw transaction to an external account (not in Quickbooks), is the transaction labeled "Categorize (Add)" or "Record as Transfer"?   How does it show up differently in Quickbooks?  The only thing I see is:

 

1. Record as Transfer is only meant for within bank accounts that are in Quickbooks. This is a transfer to an external account (personal checking not in Quickbooks) so I would use Categorize.

 

2. Record as Transfer won't list it in with the Expenses. The account it's Categorized as is an Equity Account (Owner's Equity:Owner's Draw) so is does show up under side menu Expenses > Expenses, which lists all expenses. Is that the only benefit or difference of having it Categorized instead of Record as Transfer?

 

What is the correct way to label an Equity Draw to an external account?

 

1 reply

C
Catherine_B
January 7, 2022

I can help you categorize your bank transactions, MPLS213.

 

QuickBooks helps you track your transactions made outside the system. You'll want to create the bank accounts associated with your transactions.

 

If you want to Categorize and add the transactions you'll select the correct expense account. If the expense account is not available on the list, you'll want to add one. Doing this process doesn't transfer the funds to the categorized account. You're simply categorizing the transaction to the affected expense account.

 

The same thing with recording the bank downloaded transaction as a Transfer. You'll have to create the bank account where the funds are transferred to if the bank is not on the list. 

 

Feel free to use these links that provide more details on how to review downloaded bank transactions and put them in the correct accounts: 

 

I recommend reaching out to an accountant to help you manage your business accounts and guide you with the correct way on how to label and equity draw so we don't mess up your books. 

 

Don't hesitate to reach out to reach out to us again if you have other questions.

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