Payments Director Equity Accounts

Hi there DirtToOil,

Ensuring that you're using the correct account and recording method is good practice when it comes to accounting for something new. It sounds like you're doing a great job of crossing your T's and dotting your I's. The QuickBooks support team is equipped with the expertise to advise you on how to navigate the technical side of QuickBooks. When it comes to these specific accounting practices though, this is a question that's better suited for an accountant.

If you're already working with an accountant, I'd consult with them on this. If you're not, you're in luck. We have a database of QuickBooks-certified accountants known as ProAdvisors. They're equipped with the accounting know-how to point you in the right direction, as well as the QuickBooks knowledge to assist you with the creation of the right type of transaction. Here's where you can Find an Accountant.

I have a couple articles that I think you'll find helpful. They should give you a better understanding on the Chart of Accounts:

• Learn about the chart of accounts in QuickBooks

• Add, edit, or delete accounts in QuickBooks Desktop

Once you've received guidance on what type of account to create and what type of transaction to record, feel free to give me a shout here in the Community and I'll happily give you a hand with the steps to complete those tasks. Have a great day!

Hi DirtToOil

Generally, Equity is accounted for separately from Liabilities so it may be good to clarify with the owner how he wants to approach this.

Typical equity accounts that will already be on your chart are things like Retained Earnings, and Profit for the Year.  These are essentially the same thing but one is the balance of all profit/loss of the business (Retained Earnings) whereas the other is just a measure from the current year.

When an owner invests money into the business, as it sounds like your is doing, you would typically add an additional account, or set of accounts into the equity section for Owner Investments, and Owner Draws (for when they withdraw money from the business).

In your case then, the items he's paid for that are currently sitting in Accounts Payable, would then be moved to Owner's Investments by Debiting Accounts Payable, and Crediting Owners Investments.

Hope this helps!