When an owner draws a certain amount, he/she may want to record it. Making the record can be essential when the drawings are made for business expenses. For recording or entering these drawings in QuickBooks, several methods can be followed. You can either set up your draw account in the accounting software or record your expenses to save the drawings. How to record an owner’s draw in QuickBooks Online can depend on the use of a Payment account. It lets you add the relevant details and then save them.
What does an Owner’s Draw mean in QuickBooks?
An owner can withdraw money from his/her account. When this account is the same as that of his/her company, it might be added to the accounting software. This process can be understood as the owner’s draw in QB. The amount of the withdrawal gets recorded. Thus, when the company owner wishes to pay back, the same amount can be deposited in this account.
Why Enter or Record an Owner’s Draw in QuickBooks?
The drawings of an owner can be recorded or entered mainly for knowing the sum incurred on personal expenses. When they are not added, the business and personal data for finance can get mixed. Additionally, you may record the amount for the following reasons:
- Expenses relating to the company may need to be maintained in the form of a record.
- By entering an owner’s draw, the accuracy of financial records can be maintained.
How to Set up a Draw Account in QuickBooks?
One of the ways to record the drawings is by creating an account for the same. The owner’s draw account in QuickBooks can be made by running Lists. Here, you can access the Chart of Accounts. Then proceed to Account and opt for New. You can create your account using this option. Then the account can be set up for recording the drawings.
- You can run the menu titled “Lists” in the software.
- Push these keys on the keyboard:
- “Ctrl” key + “A” key
Or, you may press “Chart of Accounts”.
- Visit the “Account” option.
- Tap on the “New” feature.
- Opt for “Equity”.
- For proceeding, choose “Continue”.
- An account will be made. Write “Owner’s Draw” as its name.
- Provide a description of the account.
- Press “Save & Close”.
Your account will be made and set up now. You can record the owner’s draw in QuickBooks using this account.
Tip: Along with the drawings of an owner, you can also enter cash withdrawal in QuickBooks. Then the accounting information can be better maintained in terms of accuracy.
How Do I Record an Owner’s Draw in QuickBooks Online as an Expense?
It has been found that an owner’s draw can be added to QBO in the form of an expense. To record it in this way, first, you can tap on Plus (+). Then you can choose Expense and head to Payment Account. On using this dropdown, you will see Equity. This option will assist you to record the drawings as expenses.
Here, you can see more instructions regarding how to record an owner’s draw in QuickBooks Online.
- Choose “Plus (+)” in “QuickBooks Online”.
- Tap on the “Expense” option.
- Click on “Payment Account”.
- Prefer “Equity” from the appearing menu.
- Add the details asked in this step.
- Use “Save and Close” in the final step.
In Step 5 of the method shown above, you will have to mention the details of the drawings. The amounts involved should be accurate. Otherwise, the recorded drawings can affect your financial records.
To Briefly State
Recording the drawings of an owner or business professional in QB is simple. The two methods given here are easy to understand. By following any of them, the drawings can be added in no time. For both personal and business expenses, you can make additional accounts and set them up. Thus, using these methods, different types of drawings can also be added.
Frequently Asked Questions
The owner’s draw can be classified in QuickBooks by first making an account for it. From “COA”, you can tap on “Account”. It should show the “New” option. Using it, you can go to “Equity”. Now, on following the other directions, the account should be ready. As the owner withdraws money, the amount shall get classified in it.
Although you can make a note of the amount you take out from the owner’s draw, it can be convenient to record it in QuickBooks. You can go to “Lists” and use the chart for adding a new account. Give it the title – “Owner’s Draw”. Now, use this for entering the amount drawn.