Category vs Account for Owner Withdrawals... what is the correct way?

Dan

Hi I've been using the category drop down for 'Owner Drawings' but have left the account drop down as is on the default business account... am I meant to change the account dropdown to 'Owner Drawings' as well?

Alexia

Hi @Dan.

i'm going to need a bit more information. Have you been categorizing all your transactions as "Owner's investments/Drawings"? That category represents transactions where you, as the owner, invests money into your business, or withdraws money from your business account for personal use.

Because "Owner's investments/Drawings" is an Owner's equity account, it acts very differently than other accounts when it comes to bookkeeping. You'd have to go through all your transactions and recategorize them appropriately for your books to be accurate.

Dan

Hi Alexia, this is a super delayed reply sorry!
I have one business account connected to Wave and withdraw / transfer money when needed into a personal account (not connected to wave). So seems I should just leave the account as is and only change the category?

trelimon

HI @Alexia - that is a neat reply but i leaves me hoping for a bit more detail. Can you explain in what way an equity account acts differently.

My issue is setting up account starting balances. I have used my personal account to pay for initial start up costs which goes way back as i have used spreadsheets before joining Wave. I don't want to sync the bank account because most of the transactions are completely unrelated (i now have a dedicated new business bank account).

My plan is
1) to create a journal entry (or Income transaction??) representing all the prior investment adding this amount to Owner Equity (or should it be Owner Investment/Drawing)
2) Then transfer all that amount to from 'Owner Equity' to 'Cash in Hand'
3) Then categorise all related Bills as payments coming from cash in hand account leaving a zero balance
4) then use the new bank account from now on.

Can you advise - thanks