Creating Equity Accounts in QuickBooks

“Quicklet” - A Podcast for QuickBooks Pro, Premier, Enterprise Solutions, Point of Sale and Peachtree users featuring helpful information, tips, tricks and suggestions for bookkeepers, business owners, and consultants.

Got a QuickBooks Mess? Call The QuickBooks Gal!

Hi, I'm Jayne Miller, The QuickBooks Gal. Welcome to another in my series of “Quicklets” – informational podcasts about QuickBooks, Peachtree and related bookkeeping topics.

Are you setting up your chart of accounts and need help creating the Equity accounts?

You will find these on the Balance Sheet and they will be used to record the Owner's Equity.

You will need a master account called Owner, Partner, Shareholder or Stockholder Equity.

Then you can create the accounts that will record Investments and Draws.

Go to your chart of accounts (you can find this by pressing the Ctrl key and the letter A at the same time, or in the “Company” menu at the top of QuickBooks).

Once there, click the “Account” button in the lower left corner and select “new.” This takes you to a screen asking you to choose what type of account will be created. Select “Equity.” Now, you can enter the name of the account. We’ll be creating 3 of them.

~ The first is called “Shareholder Equity.” Enter that in as the account name and click “Save and New.”

~ Now in the account name section enter “Draws” and click the check-box next to “Sub Account of” and use the drop down menu to select the “Shareholder Equity” account we have just created. Then click the “Save and New” button.

~ Finally, we’ll create one more account. Enter “Investments” as the account name and again, click the box next to “Sub Account of” and select “Shareholder Equity.” Then click “Save and Close.”

I've used the example of an S-Corp chart of accounts here. You can use the same method to set up Owner Equity, Draws & Investments for a sole proprietor.

Well, that’s it for now. Please tune in again for another in our Quicklet© series.
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