How to Record Owner Contribution in QuickBooks Online & Desktop?

How to Record Owner Contribution in QuickBooks Online & Desktop?

QuickBooks allows you to record personal money that you use to start a business or pay your bills. It is also known as Capital Investment. These funds usually come from co-workers and owners. By recording the capital investment or the owner’s cash contribution, you can track money invested by an owner or partner in a business. However, most users have no clue about how to record owner contribution in QuickBooks Online or QuickBooks Desktop. If you are one of those, we will help you to understand the whole procedure for recording owner’s contributions in QuickBooks.

How to Record Owner’s Cash Contribution in QuickBooks Online?

For recording owner’s contributions in QuickBooks, one is required to prepare the equity account. This will let you track money invested by your owner or partner in a business. Only after creating the equity account, you can start recording the investment. Later, you can continue recording the payback of the investment. To learn the entire procedure in detail, read here how to record owner’s cash contribution in QuickBooks Online:

Step 1: Preparing the Equity Account

As you set up the equity account, you need to add your partner or owner as a supplier first. Once after that, you can create the equity accounts. Do remember that in a company, owners have stocks while the partners contribute money or other assets without having the need of sharing in a profit and loss. In the following details, you will learn how to set up the partner and owner as a supplier and create an equity account.

Add Partner or Owner as a Supplier

When you set up the supplier, QuickBooks will use it in order to track what you and your owner contribute to the business. This should also be noted every owner or partner has to add a supplier for each person. Here are the steps for that:

  • Click on the “Expenses” menu.
  • Then, go to the “Suppliers” option.
  • Press the “New Supplier” button.
  • Now, you can enter the details and click the “Save” button.

Create Your Equity Account

Since you have created a new supplier, your account is ready to prepare the equity so that you can find out what has been invested or withdrawn from the business. Please note if you are the only owner of the business then you just need to have one equity account. However, if there is more than one owner or partner then you should create the equity account first. Later, you can set up a separate equity account for each owner or partner. For creating the equity account, you can walk through the following steps:

Option 1: Set Up the Equity Account for One Owner

  • Open the “QuickBooks Settings” menu.
  • Then, go to the “Chart of Accounts” option.
  • Here, you can click the “New” button.
  • Now, go to the “Account Type” drop-down arrow and choose the “Owner’s equity” option.
  • Click on the “Detail Type” drop-down arrow and choose “Owner’s Equity” based on the situation.
  • Once done, select the “Save and Close” button.

Option 2: Set Up the Equity Account for Multiple Owner

  • First of all, prepare an equity account.
  • Then, you can make a separate equity account for every owner.
  • At this point, you can enter the necessary details, and choose the “Is sub-account”.
  • Here, set up the parent account.

By creating an equity account for single or multiple owners, you can easily record the owner’s contribution or capital investment in QuickBooks Online. All you just have to do is set up the supplier before creating equity accounts.

Step 2: Recording the Investment

Users do not have to record the investment if already connected with the bank account or import the bank transactions. However, you will have to classify the transactions linked with deposits. On the other hand, if you are not connected with the bank account then you are required to record the deposit manually into the equity account. Let’s find out how to get it done:

  • Press the “+New” menu.
  • Here, choose the “Bank deposit” option.
  • Go to the “Account” drop-down menu so that you can pick the account into which you are depositing the amount.
  • Once done, move to the “Date” column and enter the date you added the money.
  • Go to the “Add funds to this deposit” option. Here, you can type the investor name in the field of “Received from”.
  • Thereafter, you can click the “Account” drop-down menu to pick the equity account.
  • Once done, you can add the “Payment Method”.
  • In the “Amount” section, you can mention the amount used to invest.
  • After that, you can click the “Save and Close” button.

This way you can add the investment in the equity account in QuickBooks Online. After doing so, you can pay back the business fund from this investment. Continue reading for in-depth details.

Step 3: Recording the Paying Back the Investment

Since you have recorded the investment already, it is also important to record paying partner co-worker, or yourself back to a later date. It is also known as the Capital Disbursement. If you want to pay back someone using a paper check then follow these steps:

  • Click the “+New” button.
  • Then, click the “Cheque” button.
  • Now, choose the business or person whom you are going to pay back.
  • After that, you can type the cheque number in the field of “Cheque no.”.
  • Once done, you can move to the “Category Details” field. Here, you can add the necessary details in the available lines:
  • First Line: In this line, you have to set the equity account that you use for tracking your investment in QuickBooks. Here, you also need to mention the amount that you are about to pay back today.
  • Second Line: Here, you need to add the “Expense” account that you use for tracking the interest you pay. Along with this, add the interest amount which is a part of today’s payment.
  • Other Lines: Additional fees and other accounts should be added to other lines.
  • After you enter all the necessary information, click the “Save & Close” button.

In case you want to pay someone using a credit or debit card then you are required to record your repayment as an expense in QuickBooks Online.

How to Record Owner Contribution in QuickBooks Desktop?

QuickBooks records owner contributions in the desktop version as well. All you are required to do is set up an equity account and add the cash contribution to the equity account. If you want to pay back the investment, you can do it in QuickBooks. Let’s find out detailed steps and learn how to record owner contribution in QuickBooks Desktop:

Step 1: Creating the Owner’s Equity Account

Before recording the owner’s contribution, you need to have an equity account. To make it happen, you can go through the following steps:

  • Navigate to the “Gear’ icon to open QuickBooks settings.
  • Here, you can select the “Chart of Accounts” menu.
  • Now, select the “New” button.
  • Choose the “Account Type” option to pick the “Owner’s equity” option.
  • Select the “Detail Type” drop-down menu to select the “Partner’s Equity” or Owner’s Equity” based on the requirement.
  • Once done, press the “Save & Close” option.

As you save these details, you will have an equity account. Now, in this account, you can continue recording the contribution of an owner.

Step 2: Recording Owner’s Contribution

To record the owner’s cash contribution, one can choose from two different options. You can either go to the Chart of Accounts menu or create the Bank Deposits. In the following discussion, you will learn both the ways for recording owner’s contributions in QuickBooks:

Option 1: Record Owner’s Contribution from Chart of Accounts

  • Click on the “Accounting” menu.
  • Choose the “Chart of Accounts” option.
  • Hit the “New” button.
  • Moving towards the “Account Type” drop-down menu. Here, you can choose the “Equity” option.
  • After this, click on the “Detail Type” drop-down arrow and choose the “Owner’s Equity” option.
  • Go to the “Name” field and click on the “Owner’s Contribution”.
  • In the “Balance” field and enter the amount of the owner’s contribution.
  • Once done, select the “Save & Close” button.

Option 2: Record Owner’s Contribution from Bank Deposits

  • Select the “+New” option from the left.
  • Then, click on the “Bank Deposit” button.
  • Click the “Account” drop-down arrow so that you can choose the account into which you are depositing the amount.
  • After that, move to the “Date” section and enter the date you added the money.
  • Now, go to the “Add funds to this deposit” option and type the investor name in the field of “Received from”.
  • Thereafter, you can click the “Account” drop-down menu to pick the equity account.
  • Once done, you can add the “Payment Method”.
  • In the “Amount” section, you can mention the amount used to invest.
  • After that, you can click the “Save and Close” button.

Now that you have created the equity account and added the owner’s cash contribution, you can continue to pay back the investment in QuickBooks Desktop.

Winding Up!

The owner’s contribution or Capital Investment is basically the money used for the company’s objectives such as machinery, vehicles, and more. It is essential to keep track of who contributes and withdraws. Hence, you should record the owner’s cash contribution. The contribution can also come from a business partner or co-worker. In this guide, we have explained how to record owner contribution in QuickBooks Online and QuickBooks Desktop. We hope we could explain better.

To import a budget file or enter cash back rewards from a credit card, you can read the helpful guides about QuickBooks:

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