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How Do I Set Up Equity Accounts In QuickBooks?

Set up Equity Accounts in QuickBooks

When you create a QuickBooks company file, it will automatically set up equity accounts in QuickBooks. QuickBooks creates an Owners draw and an Owners Equity account. In this post, we will try to answer some common queries related to Equity accounts in QuickBooks Online so that you can develop a fair understanding of the term. Furthermore, we will also discuss the various types of equity accounts in QuickBooks. Read the full blog and get all your queries answered related to QuickBooks equity accounts. 

How do I set up equity accounts in QuickBooks? Dial our helpline number 1.800.579.9430 and get all your answers from qualified QuickBooks experts

What Are the Different Types Of Owner’s Equity Accounts In QuickBooks? 

When you set up equity accounts in QuickBooks, you have the following account options to set up: 

Preferred Stock: Preferred Stock comprises a set of corporation shares that have specific rights that are not accessible to prevalent shareholders.

Common stock:

It is a security term that is used in almost every US Corporation. It is also known as common stockholders and stockholders elect the board of directors through this. 

Retained earnings:

Retained earnings are defined as the number of profits gained through a business. This benefit is also used in the balance sheet and cash flow statement. 

 Additional paid-in capital:

When you set up equity accounts in QB with the additional paid-in capital, it refers to any payment that is deposited through the investors. It is also known as an excess amount that outstrips the par value.

Treasury stock:

This is a certain amount that organizations use to maintain their treasury. The treasury stock value can also be a negative value. 

Opening Balance Equity Account

QuickBooks sets opening balance equity account for you if you want to track the owner’s equity in a sole proprietorship. This equity account in QuickBooks records the following transactions:

  • The ending bank statement balance transaction when EasyStep Interview is used to creates a new bank account. 
  • Opening balances for other Balance Sheet accounts created in the Add New Account dialogue box.
  • Opening balance entered during the setup of New Customers or Vendors. 
  • Accrual basis opening accounts payable transactions as of the start date.

When you set up equity accounts in QuickBooks that falls in the category of opening balance equity accounts, you may face multi-faceted issues. Sometimes, the users do not know how to utilize the Open Balance Equity account. Creating transactions that post to the Open Balance Equity account is also a faulty practice. You may identify the issues in these accounts when a balance remains in an Open Balance Equity account long after the initial start-up of the data file. Also, when you set up equity accounts in QuickBooks, and Open Balance equity account shows balance, you need to look into the matter. 

Read More: How to Close Books In QuickBooks? Here Is Your Answer

Need To Know More? 

In this post, we have discussed some common types of equity accounts in QuickBooks and their characteristics. However, if you are wondering how do I set up equity accounts in QuickBooks, give us a call on our helpline number 1.800.579.9430. In no time, you can acquire relevant assistance to set up equity accounts in QuickBooks.