Skip to main content
A
arkvalleyinfo
October 16, 2018
Solved

How are owner investment/drawings transactions categorized?

  • October 16, 2018
  • 2 replies
  • 0 views

I have a personal account and a business account set up through the same bank. 

My question has 2 parts. When I transfer money from my business account to my personal account to pay myself, how is this recorded on the Bank page? Do I press Add, Find Match, or Transfer when recording this?

When I want to invest additional capital into my company from my personal to my business account, how is that recorded? It is currently recorded as a "Transfer from Owner's Investment"? But how is this different from Owner Investment?

Best answer by Rustler

For a company taxed as a sole proprietor or partnership, I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)

[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

Use the drawing account as the expense for the fund transfer
Use the investment account as the source (from) account for a deposit

2 replies

Rustler
RustlerAnswer
October 16, 2018

For a company taxed as a sole proprietor or partnership, I recommend you have the following for owner/partner equity accounts  (one set for each partner if a partnership)

[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here

Use the drawing account as the expense for the fund transfer
Use the investment account as the source (from) account for a deposit

    C
    ChrisCanuk
    October 31, 2018

    I was thinking that accounting for my Equity investments and withdrawals would be a longer drawn-out process, but you have made this look so simple. I'm grateful. Thank you very much. I'm guessing that it's the same process regardless if it's in Canada or the USA Rustler?

    qbteachmt
    qbteachmt
    October 16, 2018

    It is best if you don't track or link or attempt to reconcile or manage a Personal Bank account in the business data file.

    You don't have Transfers. You have Drawings.

    You use the bank's site to make Transfers, but that is just avoiding a physical trip to the bank. In the bookkeeping, that is the same as a Paperless check to you from Draw as Equity out.

    K
    KG77
    July 31, 2020

    Hello, I’m having some confusion over the owners draws as well. I have transfers between personal and business accounts. How do I record the transaction from the business account to the personal if it is a personal draw? 

    Terms & ConditionsAccessibility statement