Business Account

Record and track owner transactions and personal funds

Keeping your business and personal finances separate is essential for accurate bookkeeping. However, there are times when you may need to mix funds—for example, funding business expenses with personal money or transferring money to yourself.

Here is how to handle these scenarios in QuickBooks Online.

Determine your business type

The accounts you use to track these transactions depend on how your business is taxed.

• Sole Proprietorship or Partnership: Use Owner’s Equity or Partner’s Equity accounts.
• Corporation (S-Corp or C-Corp): Use specific accounts like Due to/from Officer or Shareholder Distributions. We recommend consulting your accountant for the correct setup for corporations.

Note: The guidance below focuses on Sole Proprietorships and Partnerships. If you run a corporation, please verify the correct equity accounts with your accounting professional.

Set up your equity accounts

To track money moving in and out correctly, we recommend setting up specific equity accounts. You can create these in your Chart of Accounts.

1. Go to the Settings gear icon and select Chart of Accounts.
2. Select New to create an account.
3. For sole proprietors or partners, we suggest creating three distinct accounts under the Equity Account Type:
   • Owner’s/Partner’s Equity: The main equity account.
   • Owner’s/Partner’s Investment: Use this when you put personal money into the business.
   • Owner’s/Partner’s Draw: Use this when you take money out of the business for personal use.

Put personal money into the business

If you use personal funds (like a personal check or cash) to pay for a business expense, you need to record this so the business owes you that money.

Option 1: Record a specific expense If you paid for a specific business bill:

1. Select + New.
2. Select Expense or Check.
3. In the Bank/Credit account field, select the equity account you created for investments (e.g., Owner’s Investment).
4. Enter the payment details and the Category (expense account) for the item purchased.
5. Select Save and close.

Option 2: Record a general fund transfer If you are simply depositing personal cash into the business account without a specific expense attached:

1. Select + New.
2. Select Journal Entry.
3. On the first line:
   • Account: Select your business bank account.
   • Debit: Enter the amount.
4. On the second line:
   • Account: Select your Owner’s Investment equity account.
   • Credit: Enter the amount.
5. Select Save and close.

Pay for personal items with business funds

If you accidentally used a business debit card or credit card for a personal purchase, you must record it correctly. It is not a business expense.

1. Select + New.
2. Select Expense or Check.
3. Select the business bank or credit card account used.
4. In the Category column, select your equity account for draws (e.g., Owner’s Draw).
5. Enter the amount and a memo (e.g., “Personal purchase - corrected”).
6. Select Save and close.

This moves the money from your bank account to your equity account, effectively showing that you took money out of the business for personal reasons.

Transfer money from business to personal

When you move money from your business checking account to your personal checking account (e.g., via an online transfer or writing a check to yourself):

1. Select + New.
2. Select Check (or Transfer if it is purely an electronic transfer between accounts you track in QuickBooks).
3. Bank Account: Select your business bank account.
4. If using Check:
   • Change the check number to EFT or Transfer if no physical check was used.
   • In the Payee field, enter your name.
   • In the Category field, select Owner’s Draw.
5. If using Transfer:
   • In the Transfer Funds To field, select your personal bank account (if tracked) or select the Owner’s Draw equity account if you do not track the personal account in QuickBooks.
6. Select Save and close.

Handling bank downloads

If your business bank account is connected to online banking, transfers to your personal account may download automatically.

• If you record the transfer manually first: When the transaction downloads, go to the Banking menu or Transactions > Bank transactions. Match the downloaded bank feed item to the transaction you created (the check or transfer) rather than adding it as a new entry. This prevents duplicates.
• If you see a paycheck and a transfer: If you run payroll and also see a separate transfer in the register, ensure you are not double-counting. Usually, the net pay from the paycheck is the money moving to the personal account. Match the bank feed line to the Paycheck transaction.

Tracking mixed-use items

For items like vehicles that have both business and personal use, categorization can be complex.

• Mileage: If you track mileage for vehicle deductions, you generally do not also expense the actual lease or fuel payments in full.
• Categorization: We recommend consulting with your accountant regarding the specific tax rules for mixed-use assets. They can advise whether to expense a portion of the payment or track it solely through equity/mileage tracking.