Sole Proprietor Accounting Question
My husband and I own a small handyman and lawn care business. My husband is the sole proprietor and I take care of the finance side of things. What is the best way to handle the transfer of income from the business account into the personal account and how is it best to keep track of that in QuickBooks?
When a sole proprietor takes money out of the business for personal needs, that is considered an equity transaction. The owner is taking a withdrawal of equity out of the business.
In your Chart of Accounts you should have an Owners Equity account. You may also have sub-accounts entitled 'Owner Contributions' and 'Owner Withdrawals'.
If you don't have these sub-accounts, that's ok, you can just use the Owner Equity account.
So, in QuickBooks, write a check out to your husband, and post it to the 'Owner Equity' account (or 'Owner Withdrawals' if you have it).
Hope that helps!
If you have any other questions, just let me know.