Help with paying my self!
One_Auto
Member Posts: 15
Hi, I'm new to wave and unsure of how to pay my self?
I have two bank accounts, Business and personal and i will be paying my wage out of the Business Acc into my personal Acc, how would I go about doing this?
Many Thanks
Chris
0
Comments
One_Auto,
You would record any money transferred to your personal account as an owners draw. If you are operating as a sole proprietor or single member LLC here in the US, you cannot declare a wage (w-2)
How would this be recorded in waze?
Thanks
@One_Auto,
That is going to depend on the treatment of owner payments in your country. I'm assuming you are not in the US. Generally though, payments that are not declared as wages go through owners draw. It is an equity account. When an owner makes a withdrawal from the business, it reduces the owners equity in the business. If you are importing transactions from your bank or have it connected, then on the transaction page, amounts written to you would be owners draw. If you are manually entering then debit owners draw credit cash.
Can you explain in laymen terms as I'm stuck on what to choose when selecting the income section under Journal?
Under Journal, I understand the Expense is the money I take out for myself, this is under Equity > Business Owner Contribution and Drawings > Drawings Account.
Why would I use the Income Section if im taking money out?
What account would I use for the Income section?
I use bank transfer from my Business Bank to my Personal Bank to pay my self!
Thanks
@One_Auto,
Owners Equity/Draws and Contributions are a balance sheet item. So money that is pulled out of the business by the owner would be coded Owners draw on the transaction journal.
Why use the Income section as well?
What would I input into the income section if I used a bank transfer from my Business Bank account to my personal bank account?
Why
@One_Auto,
The transaction journal is not necessarily just income and expenses. It represents each transaction recorded for the business. So all activity contained in the banking accounts are placed on the transaction journal. Some transactions may be deposits, they could from sales or owner loans or proceeds from debt. There are withdrawals which may represent expenses or owner draws or the paydown of debt. Depending on how they are categorized will determine whether they effect the income statement or balance sheet.