How to record withdrawals for Business owners?

hong

Hi there,

1) I am trying to record withdrawals into the owners (total 2 partners) accounts.

This link (https://community.waveapps.com/discussion/1032/record-transfer-between-personal-and-business-account) says that we can use "Business Owner Contribution and Drawing -> Owner Investment / Drawings" and "expense" out the withdrawal.

However, under the Chart of Accounts - "Retained Earnings: Profit -> Owner's Equity", the bubble says that it is used to track money I have taken out of the business.

So which is the correct account should I use, please?

2) As I am recording these as profit withdrawals, do I need to follow this link(https://community.waveapps.com/discussion/2463/properly-recording-owners-equity-and-drawings) and create the "Dividends Payable" accounts first?

3) Over the past months, both of us did some withdrawals here and there and recorded them as "advances" into "Liabilities -> Due to us" accounts.

We will only finalize the profit sharing figure at the end of the year.

So when that time comes, how do I record this figure and use the past payouts (advances) to offset it?

Is it through "Dividends Payable" account as mentioned in Point 2 above, but that article is a bit confusing though.

Hope you can shed some light please.

Thanks!

Mikeg

hong,
When you have a partnership, draws by the partners should go to Owner Drawing. Retained earnings will have cumulative profit of the business. Skip the dividend payable. If you have made withdrawals "here and there" then it would a due from you and your partner (not a liability) or you should probably classify as an owner draw. Be sure to set up an owner draw for each of you.
Mike G, CPA
www.mgfinancial.net
Keep me in mind if you need a CPA