DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Sole Proprietorship take out money for personal use from personal bank acc

#1

Hi all, the case is

  • Sole Proprietorship earn money on paypal
  • transfer money to Personal bank account
  • take out money by ATM for personal use from Personal bank account

First i create a bank acc for paypal and transfer money to personal bank account, and i dont know what’s next step.

I have search the question on forum and read following post

But i still dont know what should i do to record it because i am very very new to manager and no skill on accounting.

What i thinking is…

Method one:

  1. Bank Accounts -> New Bank Accounts -> Name = “Personal Bank Account”
  2. Setting -> Chart of Accounts -> New Account -> Name = “Personal Living Expenses” / Group = “Equity”
  3. Receipts & Payments -> New Payment -> Account (Upper one) = “Personal Bank Account” / Account (Below one) = “Personal Living Expenses” / Unit price = “1000”

Method two: (i think this method should be wrong…)

  1. Bank Accounts -> New Bank Accounts -> Name = “Personal Bank Account”
  2. Cash Accounts -> New Cash Account -> Name = “Personal Living Expenses”
  3. Inter Account Transfers > New Inter Account Transfer -> Paid from = “Personal Bank Account” / Received in = “Personal Living Expenses”

My question is:

1~~ Two method which one is right? Or both are wrong? If both wrong, let me know what should i do, thanks.

2~~ Should i call “Personal Living Expenses” as “Proprietor’s Current Account”?

3~~ If my “Personal Living Expenses” total (1000usd) == All My Earning total (1000usd), and if no any other item on my Balance Sheet, then now my Balance Sheet “Equity” Will be 0 (zero)??

4~~ If i also pay credit card fee (persional use) from my “Personal Bank Account” online service, i just need do follow step right? let me know if i am wrong.

  1. Bank Accounts -> New Bank Accounts -> Name = “Personal Bank Account”
  2. Setting -> Chart of Accounts -> New Account -> Name = “Personal credit card fee” / Group = “Equity”
  3. Receipts & Payments -> New Payment -> Account (Upper one) = “Personal Bank Account” / Account (Below one) = “Personal credit card fee” / Unit price = “500”

Thanks so much.

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#2

Both methods are completely incorrect. Several points:

  1. You should not create your personal bank account in Manager. It has nothing to do with your business.
  2. You should not create an account for personal living expenses. They have nothing to do with your business.
  3. For your equity accounting, you should either have an owner’s capital account or an owner’s equity account. For a sole proprietorship, they are the same from an accounting perspective. See https://www.manager.io/guides/8936 and https://www.manager.io/guides/6971.
  4. No transactions having to do with a personal credit card should be entered in your business accounts.

You need to learn how and why personal and business accounting are separate for proprietorships. And you need to learn about double-entry accounting before you can use a program like Manager. I recommend starting here: https://www.accountingcoach.com/. It’s free and there are lots of examples.

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#3

oh my god…i am doing everything wrong :frowning:

If my Sole Proprietorship do not have a business accounting (in real, i dont have it…the money really transfer to my personal bank acc from paypal…i know i should apply a business accounting but i dont have…) then will my method one is ok? But yes…i dont think i am doing right…

Because my business the money will come like this in real world

  1. themeforest.net earn 100usd
  2. transfer from themeforest.net to paypal 100usd
  3. transfer from paypal to my personal bank acc and become 750hkd
  4. now i can atm take out the money for my personal use

So that why i have create a personal bank acc at “Bank Accounts”, if i dont create a personal bank acc so how can i record paypal(usd) tarnsfer money to my personal bank acc(hkd) and the exchange? (step 3 and 4)

I read this two post and the first post said Set up and use capital accounts, but at the post last it said i can use Simplify equity accounting for sole traders / proprietors.

I tried rename Retained earnings as Owner’s equity but what next i need to do?

  1. I tried transfer money from paypal(usd) to paypal(hkd) (exchange, in real it really exchange once at paypal website and send to my personal bank acc at same time)

  2. Receipts & Payments / New Payment and record the money from paypal (HKD) to owner’s equity when i take out money from my personal acc at ATM .

  3. But in real world, the money not take out from paypal(HKD), its take out from my personal bank acc at ATM, for example

2019-01 transfer from paypal(750hkd) to personal bank acc(750hkd)
2019-04 take out the money 400HKD from my personal bank acc at ATM

So the timing is wrong because 2019-04 not direct from paypal to ATM

I cant find a Solution on this point. How can i record this at Manager?

https://www.accountingcoach.com/ english language too hard for me :frowning: i am trying to learn from it.

Thank you so much.

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#4

You have described such a mess I cannot begin to sort it out. Sorry.

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#5

I am really sorry about that because my english language skill not well…please forgive me :frowning:

I dont have a business bank account, i try make it more simple.

  1. 2019-01 themeforest income 100usd
  2. 2019-02 themeforest 100usd transfer to paypal 100usd
  3. 2019-03 paypal 100usd Exchange paypal 750hkd at paypal website
  4. 2019-03 paypal 750hkd transfer to personal bank acc 750hkd
  5. 2019-04 personal bank acc 750hkd -> ATM take out 750hkd for personal use

Because you told me that i should not create my personal bank account in Manager, so i have no idea the step 4 and 5 how to do in Manager.

Please give me some hints, thanks all, its really a big help for me :slight_smile:

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#6

@heyjo00as, your English is not the problem. You simply have your personal and business finances too tangled together. As I wrote before, most of the events you describe are not business transactions and should not be entered into Manager.

You can run a business from your wallet as a cash account. But once you introduce three financial institutions and two currencies, that does not work anymore. The trouble is that you are moving business income through personal accounts and converting currencies within one of them. So in Manager, that PayPal account must be two different bank accounts. Now you have four bank accounts. And then you take money from what should be a business account as personal draw.

As I said before, you need to understand proper equity accounting for a proprietorship before you can hope to account correctly for your business. Invest the time to learn the accounting principles. Then learn Manager.

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#7

Thanks, that mean i should take out money from one of my paypal account (maybe paypal HKD) for my personal draw?

Seem that almost solved my problem. thanks

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#8

@heyjo00as, you have scattered your discussion of withdrawing money in multiple topics on the forum. That makes it very difficult to obtain answers, especially when you keep asking the same questions again and again. Your questions have been answered.

I am closing this topic.

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closed #9
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