Owner Investments & Owner Draws

How do I handle owner investments and owner draws?

If you are doing cash accounting, it's very easy to handle owner investments (money that the owner puts INTO the business) and owner draws (money that the owner takes OUT of the business).

For accrual accounting there is one more step, though it's still pretty easy to handle in Goldenseal accounting software.

HINT: If an owner takes a regular salary, you can handle the draw through your regular payroll instead.

Setup

To keep track of owners, first do the following:

  1. Choose Other Lists from the Options menu, and choose Owners from the submenu.
  2. Click the New button.
  3. Enter details for the owner.
  4. Click OK.

If you also want to track ownership on an accrued basis, do the following:

  1. Choose Owner Equity from the Accounts menu.
  2. Click the New button.
  3. Enter details for an owner's share of the business.
  4. Click OK.

Owner Investments

When an owner puts money into the business, follow these steps if you use cash accounting:

  1. Choose Checking Transactions from the Bank menu, and choose a bank account from the submenu.
  2. Click the New button.
  3. Enter Deposit into the Type field at top center.
  4. Enter Owner into the Received From popup field.
  5. Enter a specific owner into the Account clairvoyant field.
  6. Enter the amount of the deposit.
  7. Enter Received on Account into the Transaction Paid field.
  8. Hit the Enter key to save the record.

When an owner puts money into the business, follow these steps if you also use accrual accounting:

  1. Choose Special Transfers from the Bank menu, and choose Equity Transfers from the submenu.
  2. Click the New button.
  3. Enter Investment into the Transfer Type popup field.
  4. Enter the owner making the investment into the Transfer From clairvoyant field.
  5. Enter an Equity account into the Transfer To clairvoyant field.
  6. Type in the amount of the investment.
  7. Hit the Enter key to save the record.
  8. Next, enter the cash deposit itself-- choose Checking Transactions from the Bank menu, and choose a bank account from the submenu.
  9. Click the New button.
  10. Enter Deposit into the Type field at top center.
  11. Enter Owner into the Received From popup field.
  12. Enter a specific owner into the Account clairvoyant field.
  13. Enter the amount of the deposit.
  14. Enter Equity Transfer into the Transaction Paid field.
  15. Enter the Equity Transfer you just created into the Reference clairvoyant field.
  16. Hit the Enter key to save the record.

Owner Draws

When an owner takes money out of the business, follow these steps if you use cash accounting:

  1. Choose Checking Transactions from the Bank menu, and choose a bank account from the submenu.
  2. Click the New button.
  3. Enter Bank Check into the Type field at top center.
  4. Enter Owner into the Pay To popup field.
  5. Enter a specific owner into the Account clairvoyant field.
  6. Enter the amount of the draw.
  7. Enter Paid On Account into the Transaction Paid field.
  8. Hit the Enter key to save the record.

When an owner puts money into the business, follow these steps if you also use accrual accounting:

  1. Choose Special Transfers from the Bank menu, and choose Equity Transfers from the submenu.
  2. Click the New button.
  3. Enter Draw into the Transfer Type popup field.
  4. Enter an Equity account into the Transfer From clairvoyant field.
  5. Enter the owner taking the draw into the Transfer To clairvoyant field.
  6. Type in the amount of the draw.
  7. Hit the Enter key to save the record.
  8. Next, enter the draw payment itself-- choose Checking Transactions from the Bank menu, and choose a bank account from the submenu.
  9. Click the New button.
  10. Enter Bank Check into the Type field at top center.
  11. Enter Owner into the Pay To popup field.
  12. Enter a specific owner into the Account clairvoyant field.
  13. Enter the amount of the draw.
  14. Enter Equity Transfer into the Transaction Paid field.
  15. Enter the Equity Transfer you just created into the Reference clairvoyant field.
  16. Hit the Enter key to save the record.

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