Drawing down on owners equity

Small businesses often operate on owners equity that is recorded in the accounts as a liability of the business to the owner. It is easiest to set this up in Bookkeeping with a liability account for the loan made by the owner to the business and configure the account with the “Is Bank Account” switch turned on. With this done it is easy to enter drawings or additional injections of capital by the owner by using the “Transfers Book” facility.

The bank transfer screen can be used to enter the drawing down of owners equity.

The "From Account" is the bank account that the drawings are taken from.

The "To Account" is the owners equity account; as you are transferring money from the business back to the owner.

The Bookkeeping program classifies all accounts that maintain a record of a source of funds as a “Bank Account”. This includes real bank accounts, cheque accounts, term deposits, cash on hand (e.g. In a cash register or petty cash box), credit card accounts, and loan accounts including loans made by the owner to the business. When a small business owner make a payment from their own money for a business expense this is usually considered as a loan to the business of that money and is recorded as such in the Bookkeeping program.