Hello, I was trying to follow the guide regarding adding members. I have enabled capital accounts on the “Customize” tab under the seetings tab on the left. When I go to settings to look for “capital accounts” all I see is “capital subaccounts”. Capital subaccounts does not let me add members. Please advise.
It looks to me as if the Capital Sub-Accounts are for categorising cashflow into and out of the capital of the business. So for example, if one is paying a dividend to a shareholder, in the Bank Account section a Spend Money transaction comes from the Capital Account, which then asks for the Member Name, and then the Capital Sub-Account to classify the type of transaction. I’ve not actually made any money to pay a dividend out of yet, so there is a bit of guess work involved, but it looks like that is how it works.
That makes sense. I actually no longer use Capital Accounts at all, because my business is a sole proprietorship. I reversed all my capital account transactions and simply use Retained Earnings as the owner equity account, and renamed it as such.
intend incorporating my sole proprietor business soon where I will still be a 100% share holder. I intend setting manager with sub capital accounts at once. Pls y did u reversed to use the retained earnings and will u advice me to go ahead with my set up or I should use your style. I am now studying how manager works.
The Capital Accounts setup for a sole proprietor is completely different from the setup for a shareholder corporation. For a start they are completely different legal entities.
If you are currently a sole proprietor and are converting to a corporation then you need to start a brand new Manager business from that date. The transactions within the sole proprietor business can’t become transactions within the corporation business.
The opening Capital Account in a corporation can only equal the valve of the issued shares and the Retained Earnings account would be zero as the corporation hasn’t traded until its first transaction which is not a Starting Balance.
The sole proprietor Capital Accounts - contributions, drawing, retained earning - do not become part of the corporation’s BS - Equity section. These values would become combined within a Shareholders Loan A/C, if applicable to the corporation’s Starting Balances.