Skip to main content
S
sydneyr
October 5, 2023
Question

Owner’s Draw: How to pay myself

  • October 5, 2023
  • 1 reply
  • 0 views

I am a sole member LLC and the only employee in my wedding photography business. I don't know the proper way to pay myself or how to execute that through Quickbooks Online. 

 

I used personal funds before my business was registered and have recorded that as an owner's investment. I want to take owner's draw to pay back my personal account now that I have a business account through Quickbooks checking (Green Dot).
1. Can I do direct deposit or an e-check?
2. If so, how do I do this in Quickbooks?
3. If not, do I have to order physical checks (is this even possible with Quickbooks checking/Green Dot)?

 

I also plan on giving myself a salary based on how many weddings I expect to book per year.
1. Do I need to wait until I take owner's draw to pay myself a salary?
2. If I pay myself a salary is this recorded different than an owner's draw or is it the same thing?
3. How do I record my own salary - I was going to pay myself twice a month on the 1st and 15th of every month from a percentage of my expected revenue.
4. If I start booking more weddings or price goes up, is there an issue with me raising the amount I pay myself?
5. Do I need to have payroll with my only employee being myself?
6. Same as above for paying myself a salary - can I use direct deposit, e-check, physical checks (all, some, or none) and what is the best way to do this?

 

Lots of questions but I can't find detailed information about this. Thanks in advance!

1 reply

C
ChristineJoieR
October 5, 2023

Let me help you, @sydneyr. To pay back your account using an owner's draw in QuickBooks, follow these steps:

 

If you work as a sole proprietor, your compensation would typically come as an owner's draw rather than a regular paycheck processed through payroll. We'll have to set up an Owner's draw account first.

 

Here's how:

 

  1.  Go to the Chart of Accounts in QuickBooks.
  2. Click the Add and select the Equity account option.
  3. Enter the Owner's Equity as the account name and balances then, click OK.

 

When it's time to compensate the owner, you can generate a standard check in QuickBooks instead of using the payroll feature. Ensure to select the Owners Equity account you established in the specified step to track the transaction accurately.

 

Follow the steps below to write a check from the Owner's Equity account:

 

  1. Go to + New, then select Check.
  2. Select who you want to address from the Payee dropdown.
  3. From the Bank Account dropdown, select the account you want the money to come from.
  4. Enter the amount you want to draw on the line with the dollar sign.
  5. In the Account column under the check image, select the Owner's Equity account you created.
  6. Click the Save and Close.

 

This process will record the owner's draw and decrease the balance in your Owner's Equity account, reflecting the withdrawal of funds from the company for personal use.

 

If you need to pay your account from Equity account, we record a reimbursement as an expense in QuickBooks Online (QBO).

 

Follow these steps:  

 

  1. Choose + New and then choose Expense.
  2. Select the bank account you want to use to reimburse the personal funds.
  3. In the Category column, select Owner's Equity depending on your business structure.
  4. Enter the amount of the reimbursement.
  5. Select the Save and Close button to record the reimbursement as an expense.

 

Furthermore, you can also consider getting some advice from your accountant to keep books accurate and expense accounts to use. Do you want to have one? Visit this article: The ProAdvisor Program.

 

I'm happy to assist you today. We are still willing to guide you with your company investment concerns. Keep safe. 

S
sydneyrAuthor
October 5, 2023

Thank you, that's very helpful. For my quickbooks checking account, who should I list as the bank when I order checks? I entered my routing and account number in my quickbooks checking account along with "Green Dot Bank" as the bank, but was told the routing number does not match. I know how to print on checks now, but have no checks to feed through my printer.

Bryan_M
Bryan_M
October 5, 2023

Thanks for coming back here, @sydneyr. You're always welcome. Moreover, let me share insights about ordering checks and matching your routing number.

 

When you order a check, you can choose your business account if that check is intended for business transactions. On the other hand, you can also use your personal account. To order a check, you can click this link: https://intuitmarket.intuit.com/?track=56036&src=QBOHELP2017B.

 

With regard to the routing number, we recommend contacting Green Dot Bank to review the accuracy of the routing number you provided.

 

We'll also share these articles to learn more about QuickBooks Checking;

 

 

We're grateful to have you here, @sydneyr. Whenever you have QuickBooks-related questions, never hesitate to reply or post again here. We'll be happy to help. Take care always.

Terms & ConditionsAccessibility statement