Setting up Partner Draws
10/19/09 1:58 PM, Viewed by asker 10/27/09 1:00 PM
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We are a new start-up company. Each partner put in money toward stock purchase to start our company. We are not yet paying anyone, but there are expenses to get things going. Also, one partner has taken personal cash draws from the company, NOT for business, and will be paying them back. I am setting up the QuickBooks accounts and want to know how to show these cash withdrawals properly so they show as draws to the partner, and owed to the company. How do I allocate these cash draws?
Solved!
Solved!
The credit is to cash. The debit would be to a current asset account. I usually call it due from Partner-name. It's not really a "draw" because paying back and you are not allowing draws at this point. "Draws" usually need to be approved by the ownership team and typically Partners should not be able to charge or write checks for personal items.
When you actually have "draws" you would create a sub account under the partners capital account called "Partner draws". That is where the debits for a draw would go.
Hope this helps. Please mark as solved if it did or ask another question. Thanks iXena.
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Answer
Thanks for that! It makes sense, and I will do that. I appreciate the help.
Have a great day!
