How to Deal with Owner Investment and Spending in Quickbooks Online 

Yes! Thanks Chris! Be sure to check out our end to end accounting training for RE Investors: www.incomedigs.com/reab2

Hi David...thanks for watching! Yes! It is completely fine to have a negative equity account. A negative equity means that one of the owners is taking out more than has been put in.This is completely normal. In fact, in an LLC, this is THE way to pay yourself. You take out owner's draws. Your Owner's equity will act as a ledger for all the positive (contributions) and negative (distributions) activity.

Hi Niobe!! Ha! I know right...."Just use the business card! That's what it's there for!". But hey, we all do it. Glad you found this workaround useful!

Hi There! You would Debit your Credit Card and Credit "Owner's Contribution" (Equity). This can be done via a journal entry...or from the Credit card banking feed...simply indicate "Owner's Contribution" in the category field. We discuss this tactic in great detail in our end to end course: www.incomedigs.com/reab2

Hey Travis...thanks for watching! A Liability account is just fine as well. I would defer to a conversation with your CPA/ tax professional on the pros/ cons/ legality of using equity vs. liability. From a balance sheet perspective...it will achieve the same result. If you treat it as a liability, you may be forced to pay yourself interest. In my experience...with my LLCs/ S-Corps...I have had no problem logging it as equity.

Hi Sophia...thanks for watching! The Owner Investment is difficult to reconcile because you don't have a comprehensive "source of truth" with which to compare. For Bank Accounts, Credit Cards, etc...you have monthly statements that state, in fact, the balance of each account. You then match QBO to those statements. With Owner's Investment, the only way to really reconcile is to ensure that you have receipts/ records of all your owner-paid for expenses. Totally those receipts/ records for a given time period should match what you have in QBO. You can surely still deduct/ write off these expenses....just ensure that you maintain a paper trail. One hybrid approach might be to keep a really simple excel/ google sheet with all expenses paid by you for the business. Link to a photo of the receipt as well. Treat this workbook as your "bank statement". Reconcile QBO against this every month.

Hi Cody...thanks for watching! The video above assumes you have a passthrough entity: S-Corp or LLC. If this is the case, your owners equity/ draws are not taxable. They do not impact the profit of the business...it is simply money flowing to/ from the business...which is always allowed. You would typically be taking some sort of draw out of these entity types...this Personal Equity is just another form of those draws and/ or contributions.

Hi! Thanks for watching! This is fine...the main benefit of using the "checking/ bank" is that you can "use" that account with expense transaction types. In the checking/ bank method...you would still use a journal entry to 0 this out and "move" the balance to Equity.

Hey Nate...Yes! You would just use that Personal spending to capture the expense in the moment. If you were to reimburse from the business, you would just Debit that account to get it to 0...this would mean you would never really need to do a journal entry to Owner's equity. Your Personal spending can track the "ins and outs" of your payments and reimbursements.

Hi Joan! Thanks for watching! As you make purchases with your personal card, you will log these expenses against "Owner's Equity". If doing a journal entry...Debit the expense and Credit owner's equity. When you pay any of the proceeds back, you would Credit your business Checking account and Debit Owner's Equity.

Hey Barry....thanks for watching! I would treat this as an "Other Expense". This will push the expense to the "Other Expenses" category of the P&L...leaving your Net Operating Income. The "Other Expense" will come off your NOI to give your actual Net Income after paying off the partner's proceeds. This is definitely deductible...so you need to capture it somewhere.

@@Incomedigs Thank you!

@@barryprice801 You're welcome! FYI...we dive into topics like these in great detail in the community that comes with the end to end course! Check it out! www.incomedigs.com/reab2