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Danni M
July 20, 2023
Question

Allocating wage

  • July 20, 2023
  • 2 replies
  • 0 views

Hello,

This may be a really silly question but please bear with me as this is my first time using quickbooks.

I have recently become self employed. When it comes to taking a income for yourself, what do you categorise this as 'Personal' or 'Business' within Quickbooks. Clients have paid into my account and I have allocated this as 'Business' however, what do I do if i want to take money out of this account and into a personal account.

2 replies

A
Ashleigh1
July 20, 2023

Hello Danni M, thanks for posting on the Community page, You can out it down as personal if it is personal account. 

paul72
paul72
July 21, 2023

Hi @Danni M 

 

The payments you're taking out of the business are Drawings or Owner's Withdrawal (you should see one of these categories depending on which version of QBO you're using).

 

At the end of the year, the business profits are calculated & tax paid. The remainder is Owner Equity (equivalent to your take home / bottom line pay) & this is the pot from which you're taking the Drawings.

Until this is all worked out, you are effectively taking money out of the business which has not yet been taxed - so you need to keep track of it & make sure there is enough in the pot every year to pay the tax.

 

Hope this helps.

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