Adding a Partner
Adding a partner involves some preparation.
Assuming you’ve done all the legal work, you know how much the new partner (let’s call him Bill) is contributing.
First you have to create the owner equity accounts (Bill’s equity, Bill’s drawing, Bill’s investment at the minimum IMO).
If Bill is buying in for cash that makes it easy, deposit the money to the bank and credit Bill’s equity-investment account and you are done. At the new year when you do the roll up of the equity accounts the amount in Bill’s equity-investment account will be moved to Bill’s equity. I prefer to do it this way so that the investment is tied to a fiscal year and easy to see, but you could just credit the investment directly to owner equity if you want.
If Bill is buying in with cash plus inventory it gets a little more complicated. Deposit the cash and credit Bill’s equity-investment as before. Then bring up inventory adjust, mark it as a value adjustment, and as the adjusting account select Bill’s equity investment account. Increase the number of items on hand and the total value of the items. If Bill is bringing inventory to the business that you did not have, then I suggest setting up the new inventory items first, do NOT enter a quantity or a value, that gets done when you use inventory adjust.
You could enter the quantity and value when setting up the inventory item, but then the total value will go to “Opening Balance Equity” and you will have to do a journal entry to move it to Bill’s equity investment, seems easier to me to let QB move the value around using inventory adjust.
The process is the same if Bill is bringing assets to the business, and depending on what they are and how you track them will determine how you bring them on the books. But what ever value is placed on the asset, becomes the cost to the business and should be shown in Bill’s equity investment account.
