Owners Equity

[Charlie57]

I am a non accounting person so please bear with me. If the owner deposits money into the business is it considered owners equity and how do I enter that into Quickbooks 2007
Thanks

[shazinoz]

Yes, it's a capital investment & you use an equity account (eg "Owner's Equity") to track it.

To record it in QuickBooks:

• Click on "Banking" (along top toolbar) and click "Make Deposits" in the dropdown menu. (If the "Payments to Deposit" window opens, click "Cancel" to deposit only the investment cheque).
• In the "Make Deposits" window, choose the bank account into which you're depositing the money & enter the deposit date.
• In the "Memo" field, you can leave it as "Deposit" or enter any other relevant notation.
• Click in the "Received From" column & enter the name of the person investing the money (In Australia, if the business is a company & the owner receives regular income from it, the owner should be set up as an 'Employee", otherwise you would use the "Other" type, but you'll need to check what the legislation is for your location)
• Click the "From account" drop-down list and choose the appropriate equity account.
• Again, the "Memo" area is optional
• If paid in by cheque, enter the "Chq No.", "EFT" or any relevant abbreviation to you for direct depositing
• Select the "Pymt Method" from the dropdown list
• Enter the total in the "Amount" column.
• Click "Save & Close"

[drmick]

That explanation helped me understand owners equity accounts, draw vs. equity, but now....

When I closed 2008 ( first year in business), last year's loss did not show in the an R/E account. In fact no R/E account appeared on 2009 balance sheet. So I added the Retained Earnings account manually. Then I found in Company Preferences/Accounting a place to set a closing date. So now I have to manually transfer last years loss to the R/E account in the GJ ? If so, which account does it come from for the transfer ?

any advice is welcome
Mick

[Joe Williams]

When you look at the Account list, in the equity section, is there an account that does not display an amount?

[drmick]

Yes, when we started up this business with Quickbooks Premier 2007, it made an account called " Owners Equity", and it had no entry on the account list. I suppose because this business is a Sole Prop. When I closed the books for 2008, it automatically added last years loss from the P&L.

My previous experience was with QB 2004 that was used in an S Corp. That version had a Retained Earnings account that worked that way.

manually adding the R/E shows an account with $0.00 on the account list so the name is not recognized as anything special.

[Joe Williams]

It sounds like the original Retained Earnings account had the name changed to Owners Equity if the previous Net Earnings gets added to it and it shows no amount in the COA. You should edit it and change the name back to Retained Earnings, and create a new account Owner's Equity.
Run a Custom Transaction Detail report and filter it to set Account to Retained Earnings and Date to All. Edit all of the transactions and change the account to Owner's Equity.

[drmick]

Thanks, Joe.

I can edit the name changes easy enough.... I have this Opening Bal Equity account with a -$30K balance in it. I have seen threads that say you should do away with this after the 1st year of business is over. It was suggested that it shd be transferred it into the "Owner's Equity" account.
You agree?


Mick

[Joe Williams]

That would be a good move!