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M
manueltorrece
April 12, 2022
Question

How to record your payments as a single-member LLC owner?

  • April 12, 2022
  • 2 replies
  • 0 views

Last month I made $X amount of money, added that income to my QuickBooks Self-employed account, then recorded a business expense of $X amount of money as an owner's draw (what I need to live – Single-Member LLC owner), AND here's the problem:

 

Let's say I categorize this transaction as "Owner's draw" or "Personal withdrawal" (money you pay yourself from your self-employed business funds). In that case, QuickBooks doesn't read this transaction as a business expense OR add it to the personal income balance.

 

So I tried to solve this situation by recategorizing the transaction as "Contract labor" instead of "Personal withdrawal," and it worked! But I'm afraid this is not the right way to do it, so what would you do?

2 replies

G
GlinetteC
April 12, 2022

Hello there, manueltorrece.

 

QuickBooks Self-Employed offers three categories of money transfers. These are:

 

  • Owner's Deposit
  • Owner's Withdrawal
  • Credit card payment

 

You can read this article for more details: Categorize money transfers in QuickBooks Self-Employed.

 

I would highly suggest reaching out to an accountant for further guidance on what category to use to ensure your books are updated.

 

Don't hesitate to let me know if you have follow-up questions. I'll be around to help.

M
manueltorreceAuthor
April 12, 2022

Thanks Glinette! I don't know if it's a bug or if I just don't understand the basic concepts. The thing is that regardless of those 3 categories, QuickBooks reads these transactions as transfers and not as a business expense when you're actually paying yourself.

    T
    Teri11_2
    July 14, 2022

    LLC member is not employee so any money paid to them is from equity.

      Y
      yperez3
      May 12, 2023

      How are you able to do this in quickbooks online? 

      G
      GebelAlainaM
      May 12, 2023

      I got you, @yperez3. I'll make sure able to set up and pay an owner's draw in QuickBooks Online (QBO).

       

      An owner's draw account is an equity account used by QuickBooks Online to track withdrawals of the company's assets to pay an owner. Let's get this setup started. 

       

      Initially, you'll want to create an Owner's Equity account first in the Chart of Accounts before you can pay an Owner's draw. Afterward, you're ready to pay the owner, create a regular check-in QuickBooks, not through payroll and be sure to affect the Owners Equity account you created.

       

      Here's how:

       

      1. Go to + New, then select Check.
      2. From the Payee dropdown, select who you want to address the check.
      3. On the Bank Account dropdown, select the account you want the money to come from.
      4. Fill out the rest of the fields accordingly.
      5. (Optional) You can skip this step if you only want to record a check. But if you plan to print the check, you can choose to print it now or later.
      6. Please know that if you need to reuse a check number, uncheck the Print Later checkbox. When you save the check, confirm that you’re aware the check number already exists.

      7. Then hit Save and close.

       

      You can refer to this article for more details on managing an owner's draw in QBO: Set up and pay an owner's draw.

       

      Please let me know in the comment section if you have any other concerns with paying the owner's draw in QuickBooks. I'll be around. Take care always! 

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