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LeeB1
September 10, 2020
Question

Sole Trader Owner Drawing

  • September 10, 2020
  • 2 replies
  • 0 views

Hi, 

 

I just started using Quickbooks and still on 1st month trial. 

 

My business structure is sole trader and i regularly transferred fund from business account to my personal account as owner drawing. I have read some discussions saying owner drawing should be record under Owner Drawing - Owner Equity. My question is my owner drawing under owner equity is in negative amount, will that be any issue? If so, what should i do? 

 

I dont need to put/invest any money into the business at this stage as it has sufficient fund to run from my sales income. 

 

Thanks for your help. 

 

Much appreciated. 

    2 replies

    Steven_Product Champion
    Steven_Product Champion
    September 10, 2020

    Hi LeeB1, 

     

    It is difficult for us to say if the Owner Drawing account being in negative amount would be an issue specifically to your business. It really depends if you are happy with the transactions within the account which bring it to a negative balance and understand why the balance is showing that way. 

     

    For peace of mind I would encourage you check with a bookkeeper or accountant to make sure the balance reporting wise is the best idea for your business 

     

    Intuit offers Find-a-ProAdvisor service for business owners to connect with QuickBooks certified accountants and bookkeepers. You can click here find an accounting advisor near you.

     

    Thanks, 

     

    -Steven
     

    B
    Blue_Bon
    November 23, 2020

    Hi LeeB1,

    My reply is a little late but I'm a new QBO user this year as well and have learned a lot from the community discussions. If it helps, I'm also a sole trader and I make regular drawings from my business account for personal use, especially to pay down my home loan. I once had to transfer some personal funds back into the business account to cover a large expense, but overall my Owner's Equity account is negative. I don't have any issues with my OE account in negative - to me it just means I've drawn out more than I've personally put into the bank account and am making use of my profits - yay :-D.  I think this is particular to how sole traders are able to manage our accounts and I'd be interested if there are any differing opinions.

    Cheers.

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