How to Set up Owner’s Draw in QuickBooks

Understanding & Finding How to Set up Owner’s Draw in QuickBooks?

Sometimes an owner may utilize the funds of his/her business for personal needs. In brief, this can be referred to as an owner’s draw. When the money is withdrawn from the company’s assets for personal work, a record of it should be maintained. If the withdrawals made are not properly recorded, it may create confusion in the company’s accounts. Thus to keep a track of the owner’s draw, an owner’s draw account has to be set up. Then the amount of the owner’s draw can be recorded in QuickBooks.

In QB Desktop and QuickBooks Online, an owner draw account can be set up through the Chart of Accounts option. Both the software contain the Write Checks button that can be later used for writing the checks/entries.

What Does Owner’s Draw Mean in QuickBooks?

A single proprietor may draw out money from a company’s funds for usage. The proprietor/business owner may not take salaries. Thus, when he/she withdraws money from the funds, its record may not exist whether as an entry or in the form of a salary. This can be termed the owner’s draw. A QuickBooks owner’s draw report can be created to keep a record of the transactions. Prior to making the report, the setup for an account of the same needs to be established.

How to Set up Owner’s Draw in QuickBooks Desktop?

You can set up or categorize an owner’s draw account in QuickBooks Desktop and then write a check from it. For setting up the account you will have to use the COA/Chart of Accounts tab. The Lists button is to be chosen. Then you will have to tap on the COA option. The Ctrl and A keys are to be pressed together. Push the Account button and click on the New option. 

The below-given instructions can make you learn how to set up owner’s draw in QuickBooks Desktop/QBDT:

  • To begin, please visit “QBDT”.
  • Clicking on the “Lists” option is required.
  • Select the “Chart of Accounts” button.
  • Tap and hold the “Ctrl” key and the “A” key together.
  • Next, pick “Account”.
  • After this, press the “New” tab.
  • Hit the “Equity” button.
  • “Continue” is to be selected now.
  • Then you have to type “Owner’s Draw” in the “Account Name” field.
  • Also, describe the same.
  • Move to “Save & Close”.
  • Go to the “Banking” tab.
  • In this step, opt for the “Write Checks” option.
  • Head to the section of “Pay to the Order Of”.
  • Select the owner.
  • Type the amount here.
  • Proceed to the “Detail” section.
  • The check amount to equity amount that was created for recording the owner’s draw has to be filled up.
  • For recording all the checks, press “Save & Close”.

How should I Set up a QuickBooks Online Owner’s Draw Account?

In QuickBooks Online, an owner’s draw or sole proprietor’s draw account can be set up via the COA option. To reach it, select the icon for Gear on the QBO homepage. Tap on the Chart of Accounts feature. Press the New tab. Head to the drop-down bar of Account Type and select the Equity option. In the drop-down of Detail Type, you need to go for the Owner’s Equity tab. The Opening Balance is to be filled up in the provided field. 

Go through the remaining steps to know how to set up the owner’s draw in QuickBooks Online: 

  • Launch your “QuickBooks Online” application.
  • Click on the “Gear” sign.
  • The “Chart of Accounts” button is to be tapped on.
  • Hit “New”.
  • Go to the drop-down of “Account Type”.
  • From here, choose the “Equity” tab.
  • In the available drop-down menu of “Detail Type”, opt for “Owner’s Equity”.
  • Mention “Opening Balance”.
  • Push the “Save & Close” tab.
  • Start the procedure for writing a check by pressing the “+New” option.
  • Tap on “Check”.
  • The bank account is to be chosen from where the amount will be withdrawn.
  • In case you also want the check to get printed, select “Print Later”.
  • The fields of “Check” are to be filled up.
  • Move to the “Account” section.
  • Pick “Owner’s Equity”.
  • Tap on “Save & Close”.
  • If another check is to be written, opt for “Save & New”.

The QuickBooks sole proprietor or owner’s draw account will now be set up. Entries can be made to it. Along with this, a report for the withdrawn amount can also be prepared.

In Summary

The owner’s draw account is set up so that it can maintain the record of the transactions made from the company’s funds. Along with this, the blog helped you to learn what is the owner’s draw in QuickBooks. With this understanding, you should be able to initiate the setup and successfully make entries in it.

Leave a Reply

Your email address will not be published. Required fields are marked *