Quickbooks: Entering Invested Cash The Right Way

Recording cash investments in QuickBooks is a straightforward process, but it's important to categorise them correctly. You can set up an owner's equity account by going to the Settings/Gear icon, selecting Chart of Accounts, clicking New, and choosing Owner's Equity from the Account Type and Detail Type drop-down menus. To record the investment, go to the Accounting section, click on Chart of Accounts, then New, and select Equity. You can then enter the owner's contribution and investment amount. Alternatively, if your bank account is connected, you can simply categorise the transactions. This involves clicking New, selecting Bank Deposit, choosing the relevant bank account, entering the date and investor name, selecting the equity account, specifying the payment method, and entering the investment amount.

Set up an owner's equity account

Setting up an owner's equity account in QuickBooks is a straightforward process. Firstly, click on the Settings gear icon, then select "Chart of Accounts" on the QuickBooks page. Next, click on "New" and go to the "Account Type" drop-down menu, where you should select "Owner's Equity".

Now, from the "Detail Type" drop-down menu, choose either "Owner's Equity" or ""Partner's Equity", depending on your specific situation. If the account holder owns stock in the venture, select "Owner's Equity". If they contribute money and other assets but do not share profits and losses, choose "Partner's Equity". After making your selection, click on "Save and Close" to finalise the setup.

If you have multiple owners or partners in your business, you can create separate equity accounts for each of them. To do this, simply select "Is sub-account" when filling out the information for the equity account, and then enter the parent account.

Record owner's contribution

Recording the owner's contribution is a very important activity as it helps in keeping the books of accounts accurate and up to date. Owner investment can be in the form of simple cash injected into the business or the owner’s fund used for buying assets or inventory.

Step 1: Set up an owner's equity account

• Click on Settings (gear icon) and then click on "Chart of Accounts" on the QuickBooks page.
• Click on "New" and then go to the "Account Type" drop-down menu and select "Owner’s equity".
• Go to the "Detail Type" drop-down menu and choose "owner’s equity" or "partner’s equity" as per your requirement and then click on "save and close".

Step 2: Record owner's contribution

• Click on "Accounting" on the QuickBooks page.
• Click on "Chart of Accounts" and then click on "New".
• Click on "New" and under the "Account Type" select "Equity" and choose "Owner’s equity" (as set up earlier) from the "Detail Type" drop-down menu.
• Type the owner’s contribution or equity in the "Name" or "Description" field.
• Type the owner’s investment fund/amount in the "Balance" field and hit "save and close" to finish the process.

If your bank account is connected to QuickBooks, you don't need to record the owner’s investment. You can simply categorize the transactions associated with your deposits following these steps:

• Click on the ‘New‘ button and then click on "Bank deposit".
• From the "Account Type" drop-down menu, select the relevant bank account, the one which is connected and you are depositing the money in.
• Enter the date of the deposited money and enter the name of the investor in the "Received from" box under the ‘Add funds to this deposit’ section.
• Choose the appropriate equity account in the "Account" field and specify the payment method.
• Enter the owner’s investment amount in the "Amount" field and click on "save and close".

Return the funds from the investment

Returning the funds from the investment

Paying with an actual check

Follow the below-mentioned steps in case you are going to send someone a paper check.

• First, you have to select +New and then you have to select Check.
• Enter the person or company you are repaying.
• Then you have to enter a check number in the check number field.
• The Category Details section should contain the following information:

First line: The equity account you use in QuickBooks to keep track of the investment and the amount you are repaying right now.

Second Line: The amount of interest included in your current payment as well as the expense account you use to keep track of your interest payments.

Other lines: Any extra charges and their appropriate accounts.

At last, you have to select Save and then close.

Set Up an Owner or Partner in QuickBooks

You have to record the things like yourself, the owner, or the partner as the supplier into your QuickBooks account. This helps you to track the capital that is invested by you and your partner. To set up owner or partner, the steps are:

• In QuickBooks, click on Expenses.
• Click on the option Suppliers menu.
• Further, select a New supplier to add one.
• Provide all the information that is required and important.
• In the end, click on the Save button to save the information about the new supplier of the business.

Set up an owner or partner in QuickBooks

To set up an owner or partner in QuickBooks, you need to record yourself, the owner, or the partner as a supplier in your QuickBooks account. This will help you to track the capital that is invested by you and your partner. Here are the steps to follow:

• In QuickBooks, click on "Expenses".
• Click on the "Suppliers" menu.
• Select "New supplier" to add one.
• Provide all the required information.
• Click on the "Save" button to save the information about the new supplier of the business.

For a general partnership with equal shares and contributions, the taking of funds for personal use is "Draw from Equity". There are no distributions from a partnership. The words "distribution" and "dividend" relate to corporations.

If you are a Subchapter S or LLC electing to be taxed as a corporation, working partners must be paid a reasonable wage before any distributions. If it is just an LLC or an informal setup, the partners cannot be on payroll, and any money paid to them is a draw against their share of the profit, which passes through to their personal returns.

Record capital investments

Recording capital investments in QuickBooks is a straightforward process that helps you keep track of your investments and maintain accurate financial records. Here is a detailed guide on how to record capital investments:

Step 1: Set Up an Owner's Equity Account

• Click on the Settings or Gear icon and select "Chart of Accounts".
• Click on "New", then go to the "Account Type" drop-down menu and select "Owner's Equity" or "Partner's Equity".
• Choose the appropriate detail type (Owner's Equity or Partner's Equity) from the "Detail Type" drop-down menu.
• Click "Save and Close" to finalise the setup.

Step 2: Record Owner's Contribution

• Go to the QuickBooks homepage and click on "Accounting".
• Click on "Chart of Accounts", then select "New".
• Under "Account Type", select "Equity".
• From the "Detail Type" drop-down menu, choose the Owner's Equity account you previously set up.
• Type the owner's contribution or equity in the "Name" or "Description" field.
• Enter the owner's investment amount in the "Balance" field and click "Save and Close".

Alternatively, if your bank account is connected to QuickBooks, you can simply categorise the transactions associated with your deposits:

• Click on "New" and then select "Bank Deposit".
• From the "Account Type" drop-down menu, select the relevant connected bank account.
• Enter the date of the deposit.
• Enter the name of the investor in the "Received From" box under the "Add Funds to This Deposit" section.
• Choose the appropriate equity account from the "Account" field.
• Specify the payment method and enter the owner's investment amount in the "Amount" field.
• Click "Save and Close".

Step 3: Record Repayment of Investment

If you need to record repayment of the investment to yourself, your partners, or co-owners, follow these steps:

• Select "+ New" and then choose "Check".
• Enter the name of the person or company you are repaying.
• Enter the check number in the "Check Number" field.
• In the "Category Details" section, include the following information:
• First line: The equity account you use to track the investment and the amount you are repaying.
• Second line: The amount of interest included in your current payment, along with the expense account you use to track interest payments.
• Other lines: Any additional charges and their corresponding accounts.
• Click "Save and Close".

Step 4: Set Up an Owner or Partner in QuickBooks

To track capital investments by owners or partners, you can set them up as suppliers in QuickBooks:

• Click on "Expenses".
• Select the "Suppliers" menu.
• Choose "New Supplier" to add the owner or partner's information.
• Click "Save" to finalise the setup.

Frequently asked questions