Let me provide some clarification of what my colleague provided answer, Grovegal.
The equity account is used to record the capital investment and withdrawals to pay back the funds from the investment. In the Equity Drawing, you enter the value you take from the business. Then the Equity Investment, you record value you put into the business. Use the drawing account as the expense for the fund transfer and use the investment account as the source (from) account for a deposit. So your chart of accounts could look like this.
- Owner Equity (parent account)
- Owner Draws (sub account of owner equity)
- Owner Investment (sub account of owner equity)
You can use an equity account and add your partner as a vendor to track the contributions to your business. It allows you to check what someone invests and makes from a business through your Chart of Accounts.
I'm also adding these articles for more tips about the process:
Please know that I'm just a post away if you have any other questions. Have a great day ahead.
