Quickbooks Owner Investment: Where Does Cash Fit?

Recording owner investment in QuickBooks is an important activity to keep 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. QuickBooks can help you in tracking the owner’s investment and recording the transaction with the help of a series of simple steps. Firstly, you need to set up an owner's equity account. Then, you can record the owner's contribution in the business in your books of accounts in QuickBooks. Finally, 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.

Setting up an owner's equity account

Next, you will need to choose between "Owner's Equity" and "Partner's Equity" in the Detail Type drop-down menu. This selection depends on your specific situation. If the account holder owns stock in the venture, select "Owner's Equity". If they are contributing money and other assets but do not share profits and losses, choose "Partner's Equity".

Once you have made your selection, click on "Save and Close". Now that your owner's equity account is set up, you can move on to recording the owner's contribution in your books of accounts in QuickBooks.

To do this, go to the QuickBooks page and click on "Accounting". From here, click on "Chart of Accounts" and then "New". Under the Account Type, select "Equity" and then choose "Owner's Equity" from the Detail Type drop-down menu. Type the owner's contribution or equity in the name or description field. Finally, 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. To do this, click on the "New" button and then select "Bank Deposit". From the Account Type drop-down menu, select the relevant bank account. Enter the date of the deposit and 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. Finally, enter the investment amount and click "Save and Close".

Recording owner's contribution

Recording an owner's contribution in QuickBooks is a straightforward process. Here are the steps you can follow:

Step 1: Set up an Owner's Equity Account

Firstly, you need to set up an owner's equity account. To do this, go to the Settings or Gear icon on the QuickBooks page and click on "Chart of Accounts". Then, click on "New", go to the "Account Type" drop-down menu, and select "Owner's Equity". In the "Detail Type" drop-down menu, choose either "Owner's Equity" or "Partner's Equity", depending on your situation, and then click "Save and Close".

Step 2: Record the Owner's Contribution

Once the owner's equity account is set up, you can record the owner's contribution. Go to the Accounting or Banking tab on the QuickBooks page and click on "Chart of Accounts", then "New". Under the "Account Type", select "Equity", and choose the owner's equity account you previously set up from the "Detail Type" drop-down menu. Type the owner's contribution or equity in the "Name" or "Description" field, and enter the owner's investment amount in the "Balance" or "Amount" field. Finally, click "Save and Close".

Alternatively, if your bank account is connected to QuickBooks, you can simply categorize the transactions associated with your deposits. To do this, click on "New" and then "Bank Deposit". Select the relevant bank account from the "Account Type" drop-down menu, enter the date of the deposit, 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, specify the payment method, and enter the owner's investment amount in the "Amount" field. Click "Save and Close" to finish.

Recording the owner's contribution in QuickBooks offers several advantages, including the ability to track the investment using the Equity account, easily access the investment amount, and add other equity accounts as sub-accounts. It also helps to keep the books of accounts accurate and up-to-date, separate from personal expenses.

Depositing money into owner's equity

Step 1: Set Up an Owner's Equity Account

Firstly, you need to set up an owner's equity account in QuickBooks. This is a simple process:

• Click on "Settings" (gear icon) and then select "Chart of Accounts".
• Click on "New", then go to the "Account Type" drop-down menu and select "Owner's Equity".
• From the "Detail Type" drop-down menu, choose "Owner's Equity" or "Partner's Equity" as per your requirement, then click on "Save and Close".

Step 2: Record Owner's Contribution

Once you've set up the owner's equity account, you can record the owner's contribution:

• Go to the QuickBooks page and click on "Accounting".
• Click on "Chart of Accounts" and then "New".
• Again, click on "New" and under "Account Type", select "Equity".
• Choose the owner's equity account you set up earlier from the "Detail Type" drop-down menu.
• 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 on "Save and Close".

Alternatively, if your bank account is connected to QuickBooks, you don't need to record the owner's investment manually. You can simply categorise the transactions associated with your deposits:

• Click on the "New" button and then select "Bank Deposit".
• From the "Account Type" drop-down menu, select the relevant bank account.
• Enter the date of the deposit and 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".

Step 3: Return Funds from the Investment

If you need to record an investment repayment, here's how to do it:

• Click on "+ New" and then select "Check".
• Enter the name of the person or company you are repaying.
• Enter a check number in the "Check Number" field.
• In the "Category Details" section, enter 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 payment and the expense account you use to track interest payments.
• Other lines: Any additional charges and their respective accounts.

Click on "Save and Close".

Additional Tips:

• If you have multiple owners or partners in the business, you can create separate owner's equity accounts for each of them.
• Consult your accountant to ensure that you're recording transactions accurately and in compliance with tax regulations.

Tracking owner's investment

Tracking Owners Investment

Recording the owner's investment in QuickBooks is an 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.

Setting up an Owner's Equity Account

Firstly, you need to set up an owner's equity account by following these steps:

• 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 button.

Recording Owner's Contribution

Once you have set up the owner's equity account, you can record the owner's investment in the business in your books of accounts in QuickBooks by following these steps:

• 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 from the detail type drop-down menu.
• Type the owner’s contribution or equity in the name or description.
• Type the owner’s investment fund/amount in the balance field and hit on the save and close button to finish the process.

Alternatively, 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 by 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/box and click on the save and close button.

Returning Funds from the Investment

You can also record an investment once you have received it and are able to repay it. You might need to record paying yourself, your partners, or co-owners back after you record an investment at a later time. Here are the steps to follow:

• Select +New and then select Check.
• Enter the person or company you are repaying.
• Enter a check number in the check number field.
• In the Category Details section, enter the following information:

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

Select Save and then close.

Setting up an Owner or Partner in QuickBooks

You can also record 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 an owner or partner, follow these steps:

• In QuickBooks, click on Expenses.
• Click on the Suppliers menu.
• Select a 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.

Returning funds from the investment

Recording the Return of Investment

To record the return of investment, you can utilise the "Make Deposits" feature in the Banking section of QuickBooks. This approach ensures that the returned funds are accurately reflected in the relevant owner's equity account. Here are the steps to follow:

• Navigate to the main menu bar at the top of the QuickBooks screen and click on the "Banking" tab.
• From the drop-down menu, select "Make Deposits". If the "Payments to Deposit" window appears, choose the payment and investment check you wish to deposit and click "OK". Alternatively, click "Cancel" if you only want to deposit the investment check.
• In the "Make Deposits" window, select the company bank account where you want to deposit the returned investment funds.
• In the "Detail" area, enter your name or the name of the co-owner who is receiving the returned investment.
• Input the amount of the returned investment in the "Amount" field.
• Click on the "From" account drop-down menu and select the appropriate owner equity account from the list of available accounts.
• Finally, click on "Save and Close" to record the transaction.

Repaying via Paper Check

If you need to repay funds to an owner, partner, or co-owner using a paper check, you can 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: Specify the equity account used to track the investment along with the amount being repaid.
• Second Line: Indicate the amount of interest included in the current payment and the expense account used to track interest payments.
• Other lines: List any additional charges and their corresponding accounts.

Finally, click on "Save" and then "Close".

Transferring Funds Between Accounts

In cases where the returned funds need to be transferred between different accounts, such as from a restricted fund to a general fund, you can utilise the following steps:

• Go to the "+ New" menu and select "Transfer".
• From the "Transfer Funds From" drop-down list, choose the bank account from which the funds are being transferred.
• In the "Transfer Funds To" drop-down list, select the bank account into which the funds will be deposited.
• Enter the amount being transferred in the "Transfer Amount" field.
• Edit the date for the transfer and click on "Save and Close".

It is important to note that QuickBooks allows for multiple owner equity accounts, ensuring that you can assign a separate account to each partner or owner in the business. This helps maintain accurate records and track individual investments.

Frequently asked questions