Personal drawings in reckon one

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Andrew Cleverley
Andrew Cleverley Member Posts: 17 ✭
edited April 2020 in Reckon One

How do you record personal drawings for a sole trader through reckon one weather its for cash, money transfer from business account or person expenses on the business account

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  • Kwikbooks (Professional Partner)
    Kwikbooks (Professional Partner) Member Posts: 824 ✭✭✭
    edited April 2020
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    Hi Andrew

    Drawings is usually an equity account for sole trader, however, however, this can be limiting and I have found it is much more practical for a lot of inexperienced clients to set up a bank account "drawings", this way you can transfer to/from, paybills if he paid them with his account, make payment, receive payment etc much easier.  

    if you need to you can also make sub-accounts to track his personal drawings like - private house - Rental Property - Loan to daughter etc.
  • Andrew Cleverley
    Andrew Cleverley Member Posts: 17 ✭
    edited July 2019
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    Hi kwikbooks

    thanks for the reply, I set up a equity account and use a journal entry to show where the funds have gone.


    Setting up a bank account called drawings does sound like it might suit better though. but will this create more work in comparison? how does this affect the reconciliation process of the drawings account? will I need to track personal spending's in this account or am I simply using it as a way to track drawings leaving the business account? if the business account has any personal expenses how would I allocate these expenses to the drawings account so it all balances out.

    I apologise if some of these questions are basic but I am fresh as can be with reckon one and accounting software in general.

    many thanks 
  • Kwikbooks (Professional Partner)
    Kwikbooks (Professional Partner) Member Posts: 824 ✭✭✭
    edited July 2019
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    Hi Andrew

    A drawings account is only used to track personal spending from a business account that your reckon file is tracking.  There is nothing to "reconcile" to with drawings it is simply what has he spent of the business money, where it is atm withdrawal, transfer to his account or eft to his kids school, or if he has put his tax refund into the business account, it all goes in and out of drawings.

    This figure simply sits there as an ongoing balance, and the accountant deals with it at the end of the Financial year.  A bank account or equity account does not affect the P&L it only shows up on the balance sheet that the owner owes the business $$ or the business owes the owner $$$.

    If he uses the business account frequently I would suggest setting it up as a bank account called Drawings it makes life so much easier than jnl entries in R1.  

    If you really need to see it back to 0.00 it can be jnl every qtr to the equity account bringing the bank account back to 0.00, but I wouldn't bother.
  • Andrew Cleverley
    Andrew Cleverley Member Posts: 17 ✭
    edited July 2019
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    Hi Kwikbooks

    Ok that makes alot more sense now and i think this will make my life a lot easier in the long haul as this suits my way of spending and tracking etc.

    I have now set up the bank account and im hoping i have set it up correctly. it is a liabilty account and my first transaction was from my cash account to the drawings account as a test. which seems soooo much easier. I did notice the running balance on the drawings account is a minus running balance is this correct?

    Also when a point of sale personal expense is completed on the business account and the transactin is imported into reckon one via bank feed am i able to allocate the personal expense to the drawings bank account to record personal spending etc

    Another question in relation to making accounts, i am wanting to create an account to keep track of super and tax, can i create another liabilty account which keeps track of funds allocated to suoer tax and gst etc


    many thanks
  • Kwikbooks (Professional Partner)
    Kwikbooks (Professional Partner) Member Posts: 824 ✭✭✭
    edited July 2019
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    Hi

    A bank account is an asset account - if the owner owes the money to the company (most of the time) then it is an asset because it is to come in (in theory) like accounts receivable.

    A liability is when the company owes the owner the money, equity goes either way, depending if the owner put equity in to start company, then took it  back and some more.

    I would set up as a 'bank' (asset) as I suggested.

    Delete the jnl entry test , delete the liability acct then set up as bank.

    Yes a lot transfer funds from business account to another bank account for Tax, and pay the gst from this.

    Super should automatically have a liability account, however, most software only ever create a Payroll liabilities and dump everything into this, payg, super, child support whatever you deduct.  I have spent days fixing one dating back 3 years in MYOB, stupid idea.

    If running payroll make the payroll liabilities the header, create new sub-account for super liab.,  child support, rent, or whatever you deduct for employees, salary sacrifice, employee additional etc.

    Create header account 'tax liability' under this another called GST liability with 2 sub accounts for gst - collected & gst-paid and track the tax codes to these accounts.
    Create your PAYG withholding under this as well.

    PAYG installment (tax on bas in advance) is an 'asset' account.

    any issues email me:   Kim@kwikbooks.com.au


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