Need help with accounting for 'drawings' or taking a draw by the owner. When I try to do this and try to take from my main checking account Wave says that all of this type of transaction must pass through a equity account. Say What?
An owner draw is a reduction of equity. The entry would be debit owners equity (draw account) credit cash.
Do I have to actually set up an equity account or do I simply transfer money into an existing equity account from the main checking account? Thanks Much. Is cash on have that I have received from customers that I put into what I call cash on hand belong in a equity account?
I believe that Wave sets up a draw account under the equity section of the chart of accounts, if not you can add one. By default Wave has a cash on hand account under assets. When I set up clients I always set up another cash account and name it their bank - checking. I'm not sure exactly what you mean by your last sentence. The entry for receipts is debit cash credit sales. When you import transactions into Wave, it is already doing doing one side of the entry. So for example the deposits are debits and expenses are credits. You then need to tell it the other side of the entry (drop down box). It is looking for the credits for deposits or loans to the business and debits for expenses or owners draw. So for deposits you would select sales for customer receipts. Hope that helps. You can email directly at [email protected] I'm a CPA and do bookkeeping and taxes.
I'm having a similar problem. When I transfer funds from my business account to myself as a draw, Wave has it categorized as a transfer. I am not able to re-assign the category as a draw. I can only make a note in the description of the type of transfer (owner's draw). When I create my reports, I have a Wave created category labeled "transfers". Do I delete the transfers and just manually enter them as owner's draws? Wave won't allow them to be relabeled otherwise.
Hi @ovhenderson are you creating a transfer from your Business Wave profile into your Personal Wave profile?
If so, it is up to you; you can either leave them as transfers because that is what Wave is representing (a transfer from your business profile to your Personal profile). Or you can do as you suggested and manually create transactions to act as owner's draws.
Thanks @Erik I have done it both ways in the past. I will go back and make corrections for uniformity.