How do I record owner Drawings?

Jeannet
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Jeannet

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How do I record owner Drawings?

Hi,

I am trying to work out how I properly record in MYOB money that we put into the business to help with startup, so basically we are loaning the business $20k. Then how do I record payments back to that loan once all set up correctly?

Also we are a newsagency and I would appreciate any advice from people as to how we record the Lotto side of things in regards to what gets swepted out of our account from NSW Lotto and how to record our commission. So far I have been recording as the days takings which includes the lotto and then doing a bank transfer entry for the money that gets Swept to go to NSW lotto, the balance from the takings is then sales from newspapers, magazines, gifts and other store products, and then what was left over from NSW Lotto after their part came out. Do it this way I am able to reconcile my bank accounts. Thought please Smiley Happy

Jeanne Tarrant

 

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Ultimate Partner GDay53
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GDay53
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Re: How do I record owner Drawings?

@Jeannet

 

Never handled NSW Lotto so not sure on that, but as for the Directors Loan.

Create a new Liability account 2-9999 or whatever number you want and call it Directors Loans. Tax code N-T (not reportable)

The do a journal entry for the $20k coming from the liability account and going into whatever bank account it went into. Again all tax code should be N-T.

When you make payments on the loan just do a Spend Money from the bank account to the Directors Loan account. Tax code N-T.

Graeme Day
Registered BAS Agent #24745540
First Class Accounts Clayfield

gday@firstclassaccounts.com
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Re: How do I record owner Drawings?

@Jeannet @GDay53

 

The first question is what type of structure does your business have.

 

My preferred Structure is a Company - some businesses operate as a Sole Trader, Trust or Partnership.

 

If you are a Company, follow the notes given by Gavin.

There have been many posts on the Community about this topic.

 

I have not had a Newsagent as a client.

You could have two ledger accounts for Lotto under a Lotto header.

 

A question that I often ask business owners are what are your Income Streams and how do you want to track them. Many Tax Accountants prepare Financial Statements with one Sales figure.

The setup in MYOB should be handled by an experienced Advisor and may change over time.

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E expressgst@optusnet.com.au T 02 9904 3672 7 days
MYOB Staff Post RienaP
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RienaP
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Re: How do I record owner Drawings?

Hi @Jeannet,

 

Great suggestions and contributions by  @Seattle and @GDay53. We are honored to have such caliber of partners on this forum. To add to their contribution, I advise my clients to use Receive Money to your correct bank account to account for receiving Directors Loan and Spend Money to pay from your bank account to the Directors Loan account as suggested by @GDay53. As to account for NSW Lotto, I am wondering if it is possible to use jobs *click here) to account for the incomings and outgoings for Lotto? 

 

Please let us know how you go as we are happy to help further. 


Regards,
Riena
MYOB Training Specialist

Jeannet
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Jeannet

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Re: How do I record owner Drawings?

Hi Graeme

 

I did what you suggested and it comes up in the Directors Loan totals as Debit meaning it is adding to the Loan balance in stead of taking it off the balance, I am not sure why this is happening maybe I am not recording it correctly.

Not sure if you saw the response I got from RienaP they said "I advise my clients to use Receive Money to your correct bank account to account for receiving Directors Loan and Spend Money to pay from your bank account to the Directors Loan account as suggested by @GDay53."

So I tried that as well and now I have a debit and a credit in the Directors loan account which is taking my total to original loan amount.

The transaction comes up correct from the business account and comes up correct as a coming to me Personal account, but ti still shows the credit and the debit in the directors loan account. Some one please help Smiley Happy

 

Jeanne

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Re: How do I record owner Drawings?

Hi @Jeannet,

 

Can you please confirm that you did the following as I suggested:

 

Owner contributing Loan

  • Create a liability account as Directors Loan
  • Receive Money to the correct bank account and coded to Directors Loan account

When the business pays back the Directors Loan then:

  • Spend Money from your business bank account 
  • Code it to the Directors Loan account

When there is Owners Drawings

  • Spend Money from your business bank account 
  • Code it to Owners Drawings account under Equity

Let us know how you go and we are happy to have this resolved as soon as. Smiley Happy


Regards,
Riena
MYOB Training Specialist

Jeannet
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Re: How do I record owner Drawings?

What I did was I created a new Liability account 2-9999 and called Director loan with the tax code set as N-T

then I Did a Journal entry as you suggested with the account directors journal as the debit for the amount of $20,000 and then used my business account as the credit for the amount of $20,000 in the Journal.

Then I did a spend money for the first payment to the loan of $500 from the business account and doing that added to the loan balance making it $20,500.

Then I did a receive money transaction to my Personal account where the $20,000 Orignally came from which meant it showed in my Personal account records as coming in and in my business account records as going out. but it took the loan balance back to $20,000 and showed transactions as a credit and a debit for the $500 which was done through the spend money and recieve money transactions.

So in my eyes in regards to my bank accounts everything is correct, but in regards to loan balance the end total does not change, Is that correct?

Ultimate Partner GDay53
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Re: How do I record owner Drawings?

@Jeannet

 

When you did the Journal to create the loan  you got it back to front, he first line of the journal should be the Bank Account and this should be a Debit. The second line should be the loan acct and this should be a Credit.

Basically taking money out of the loan account and putting it into the bank account as a deposit.

Payments are done using Spend money transactions  with the Pay from account being the Bank account and the amount allocated to the Loan account.

Graeme Day
Registered BAS Agent #24745540
First Class Accounts Clayfield

gday@firstclassaccounts.com
MYOB Certified Consultant
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