Newbie Q? - How to interact with accounts "outside of the quickbooks world"?

Question

I just purchased quickbooks 2007 Pro, and spent some time over the weekend setting it up.

I have a sole proprietorship. I'm the only person working in the business - no employees, very simple.

I take care of all of my business expenses. My wife does all of our home / personal expenses.

Money only goes between business and personal accounts when we regularly transfer money from the business checking account to our personal checking or savings account.

Ideally, I'd tell quickbooks, "This money is gone - forget about it - wy wife will take care of it". Then my wife handles it from there - she keeps track of interest on our mortgage, etc.

My problem is it looks like the "owner draw" account will just decrease forever. That, or my owner equity would increase forever.

Am I missing something fundamental here, or does quickbooks also expect me to do all of my personal financial stuff in it as well?

I'm sure once I figure this out I'll enjoy the program immensely. I really like the "reports" - really gives me an instant snapshot of who my biggest customers are, etc.

Thank you for any help you might provide!

MDB · Accepted Answer

Ideally, you would have Owner Draw and Owner Contributions as sub accounts under Owner Equity.  The draw account will always keep getting larger (more negative) and the contribution account will keep getting larger (more positive).  The Equity account is the difference of contribution and draw.

Allan Martin · Answer

Say what?

Scott · Answer

Usually the owner draw account is closed into retained earnings after the end of the fiscal year, so the account only shows current year draws. Keep in mind that Retained Earnings means just that, the earnings from the business which have been retained for it's use. Owners draws reduce what is retained, so should lower the Retained Earnings account. EOY debit R/E credit Draw.

Scott out.

L · Answer

Yes.You are using QB to keep track of your business income and expenses. As your business becomes more profitable, you are taking the profits. So, yes, the owner's draw (if that is where you are recording "withdrawals of the company's assets to pay an owner) will reflect how much money you take (draw) out of the company. Owner's draw and owner's equity are not expense or income accounts -- they have no effect on the profit/loss of the business.Why would you keep track of your personal stuff in QB?I use QB for our business, and I use Quicken for my personal finances. At a time long past hubby did some home-based sales and for that, we had a sole-proprietorship. I tracked all those expenses using Quicken categories. The Premier edition of Quicken Home and Business can do invoicing and reporting, and all information integrates with Turbo Tax. If you are satisfied with QuickBooks - great! But do realize that Quicken is an option.

Newbie Q? - How to interact with accounts "outside of the quickbooks world"?

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