Sole Trader - Draw Money for personal use from company

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I am an Australian Sole Trader, I have a ABN, but am not registered for GST as I will not be earning all that much from my company - just a little bit of IT work on the side of my main job.

Anyway to get to the question, how should I go about recording into manager any money drawn out of the company bank account into my personal bank account for drawings?

If I was using MYOB I would enter the amount drawn from the company bank account as if I was writing a cheque and record the entry in MYOBs accounts list, 3-1200 drawing.

Cant seem to work this out in Manager.io.

Any tips or suggestions would be appreciated :).

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Go to Chart of Accounts under Settings tab. Create new equity account called Drawings, then use this account when categorizing payments to yourself.

It’s really the same process as in MYOB.

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I am a sole trader, so I understand all profit in the business I can take drawings from.

I wanted to keep a record of monthly drawings so enabled capital accounts, added me as a member and selected drawings from drop down, this is good as I can utilise the reports.

On the summery tab this worked nicely in the equity section with drawings in () a negative amount which is correct.

My business and tax year end on the same date 5th April. I have re-set the summery page date to reflect this.

Now being in the new business/tax year I would like to see my drawings account brought to zero so it only shows the amount drawn this year.
(I thought it would do this when I changed date on summery, I was mistaken)

I read on other topics I should re-name retained earnings to owners equity?

I would still like to see what I’m drawing each year rather than it being added on.

Can anyone suggest what I could do to make this happen.

Big thanks.

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The reason your capital account doesn’t reset to zero when you change the Summary period is that it is a permanent or balance sheet account. All asset, liability, and equity accounts showing cumulative totals since inception. That is true of all proper accounting systems. Income and expense accounts show totals for the period, which is what Manager so elegantly does when you reset the Summary period.

To see your draw history, go to Reports and create a Statement of Changes in Equity. You can define the period. You can even do comparisons from period to period.

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When I have the drawing account. Do I have to do a Journal Entry? I haven’t used MYOB so If you could tell me how the process continues on Manager it would be great.

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@bizancia, this topic is from last year. Since then, Capital Accounts tab has been added which allows very elegant way to handle handle drawings and funds contributions.

So go to Capital Accounts tab, create yourself as a sole trader.

When you spend money under Bank Accounts or Cash Accounts tab, instead of allocating money to some expense category, allocate money to Capital Accounts → Your name → Drawings

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In my case I am a sole proprietor (self-employed), running a childcare business. I am a member of staff but, if I understood correctly, I cannot pay salary to myself, instead I ‘draw’ money out of the business (please do not through tomatoes at me if I am wrong).

What tabs I should create and where and if someone could give me the examples of book entries it would really help me to understand better.

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@oksana1975, look at my previous post.

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So just to confirm what has been said about “Drawings”. As a sole trader, when I import my bank statement (my personal bank account is also my business bank account), I mark all “personal expenses” as “Drawings” (under Equity)… Am I right in doing so?

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@JONGAR, yes that’s fine.

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Thank you Lubos.
As for the business related expenses, shall I:

  1. mark them also as drawings then offset them in an expense claim? or
  2. assign them directly to their respective expense item?

What’s the best practice here?
Thanks

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Business related expenses must be directly categorized to their expense account. Categorize only personal expenses as drawings.

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Can someone show me a screenshot of how to create Statements of Changes in Equity.
And another question please: I have created “Drawings” in Equity which I am now using when do payments to myself. However, can someone explain more about capital accounts or give me a link explaining it please. On Lubos advice I created Capital Accounts → My name but I could not create Capital Accounts → Your name → Drawings. Even though I made several transaction to drawings in Equity when I click on Capital accounts, the balance is always showing 0.00. I know I did something wrong but cannot figure myself what exactly. Sorry to be a pain. :frowning:

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Click on Reports tab. Click on Statement of Changes in Equity under Financial Statements. Click New Report and enter required information. Click Create.

http://docs.manager.io/capital-accounts.html

You must create a capital account for yourself under the Capital Accounts tab. Then create the Drawings subaccount under Settings.

It sounds like you created a separate Drawings account, which will not be linked to your Capital account. Drawings must be a subaccount.

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On the Left hand side under your chosen tabs you will see customize, click that then enable Capital Accounts then you will see it in your list of tabs.

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Thank you itmoto, I’ve enabled Capital Accounts but I struggle to create sub-account.

“Most of the time it’s appropriate to rename this (Capital Accounts) account. For example, if the business represents sole proprietor, the account should be renamed to Owner’s equity”. But if I already have Owner’s equity, may I just draw money using this account?

I think the more questions I ask the more confused I become. Sorry.

18

I did it! I did it! I have finally created sub-account! thank you!