Owner Equity Draw - Best Practices

1

Hi, I’m a brand new user, just 2 days in, liking what I see so far. I’m a sole proprietor, cash basis accounting. I followed the setup guide for “Set up business as a self-employed services provider”. My question is about best practices to take an owner equity draw. I have searched the forum, and have seen suggestions to use the “Payments” tab, and to use the “Journal Entries Tab”.

I explored the “Payments” tab, and what I did was
Paid From Account: [Business bank account]
Payee: [Owner Name]
Description: Owner Draw
Account: Owner’s Equity

It seemed like it worked, but I wanted to double check this approach, because I also saw a post suggesting to use the “Journal Entries Tab” was better.

I haven’t done the Journal Entries approach yet, but if I did, I would imagine I would debit the “Owner’s Equity” account and I’m not quite sure what account I would credit to make it balance.

Advice is appreciated!

2

If you read the Guides, you’ll discover you cannot use journal entries for transactions that move money. What forum post suggested you could?

3

I think I probably misunderstood it. In any case, is the first approach I outlined using the Payments tab proper?

4

Yes

1 Like
5

Thank you for your advice.