There are two of us in the business — how do we keep track of what each partner put in and took out?

What makes up each owner's position?

Each owner's position is a running balance, not a figure fixed when the business started. It starts from the opening position carried forward, rises with the owner's contributions and share of profits, and falls with their share of losses and their draws or distributions. AccountingTools' partnership accounting article describes the same thing: a separate account tracks each partner's investment, distributions and share of gains and losses.

In a partnership or LLC, a personal cost of one owner paid from the business account belongs in that owner's position, not in business expenses: the same article records funds a partner extracts from the business as a debit to that partner's capital account. Booking it as an expense overstates costs and hides the draw from the other owner.

Does the form of the business change the structure?

Yes. The accounts that exist, and how results reach the owners, depend on the form:

Delaware's General Corporation Law, section 170, lets the directors declare and pay dividends on the shares, subject to any restrictions in the certificate of incorporation and to the limits that section sets on the funds dividends may come from. Its section 219 defines the stock ledger as the record of stockholders, their shares and all issuances and transfers of stock. It does not record what each paid, so keep that amount with it for each issuance. Agree the total of that record to the stock and paid-in capital accounts in the ledger every period.

Record money a corporation pays to or for a shareholder outside a declared dividend, wages or a repayment of what it owes them in a separate account named for that shareholder, not as a business cost, and have the corporation's accountant decide, before the year's accounts are closed, what it is and which kind of account it belongs in.

How should the ledger keep each owner separate?

In a partnership or LLC, give every owner their own equity accounts. One structure that keeps each owner's contributions, draws and accumulated results apart looks like this:

• Owners' equity, as a parent account
  • Owner A contributions, everything Owner A has contributed, reduced only when a contribution is returned
  • Owner A capital, the results allocated to Owner A, less the draws closed into it at each year-end
  • Owner A draws, this year's draws until they are closed to capital at year-end
  • The same three accounts for Owner B
  • Unattributed owner movements, used only while rebuilding past records

Each owner's position is their contributions plus capital, less this year's draws. After the year-end allocation, the owners' positions plus any unattributed balance equal total equity.

Two habits break the tie:

• One pooled equity account. Nothing in the books then says whose money moved.
• Per-owner detail kept only in a side spreadsheet. It drifts from the ledger until neither can be relied on; if you keep a schedule too, agree it to the ledger every period.

How a system holds a set of equity accounts per owner differs by product, so check its own current documentation before setting them up.

Where does each owner's share of the result come from?

It comes from your agreement and, on anything it does not cover, from the default in the state entity act that governs your business. If you are unsure which state's act that is, for example for a general partnership that never filed with any state, ask your adviser. Delaware's statutes show how the default can differ by form; your own state's act sets yours:

• Agreement first. Delaware's partnership act has the partnership agreement, written, oral or implied and including amendments, govern relations among partners, apart from matters section 15-103(b) reserves, with the act governing where the agreement does not provide (sections 15-101 and 15-103). Its LLC Act defines the LLC agreement as written, oral or implied too (section 18-101) and allocates profits and losses as that agreement provides (section 18-503).
• Partnership default. Delaware's section 15-401 gives each partner an equal share of profits and charges losses in proportion to each partner's share of profits.
• LLC default. Where the agreement does not provide, Delaware's section 18-503 allocates profits and losses on the agreed value of each member's contributions, as stated in the LLC's records, to the extent the LLC has received and not returned them.

An even split is therefore not a safe assumption. Where contributions were unequal, or one owner put in property or effort, keep contributions and shares of results as separate components. Take the sharing basis from the agreement or the governing default, not from who put in what, unless that default itself allocates on contributions, as Delaware's LLC default does; then the shares follow the agreed value of contributions stated in the LLC's records.

The rows below that mention what you agreed orally or by conduct rest on Delaware's partnership and LLC acts, which count a written, oral or implied agreement as the agreement (sections 15-101 and 18-101); before posting on an unwritten basis, confirm with your adviser that your own state's act does the same. Your first step depends on where you stand:

If you cannot agree which basis applies, leave the result unallocated and take the question to your adviser before the business's tax return is due.

How does the roll-forward work each period?

For each owner, opening position plus contributions plus share of results minus draws gives the closing position; agree each figure to that owner's accounts in the ledger. At a close before year-end, add each owner's share of the result so far, on the agreed basis, as a line not yet posted.

Ana and Ben run a general partnership whose written agreement gives Ana 60% and Ben 40% of profits. Ana opened the year with 20,000.00 in her contributions account and 10,000.00 in capital, Ben with 8,000.00 and 2,000.00. During the year Ben contributed equipment the partners agreed was worth 9,000.00, with a 3,000.00 loan the business took over, a net 6,000.00. The year's profit was 50,000.00; Ana drew 24,000.00 and Ben 18,000.00.

After the year-end entries, the balance sheet must show total equity of 54,000.00; if it does not, find the difference before either owner gets a statement.

Ana and Ben's year-end entries are:

QuickBooks Online, for example, carries the year's result into an equity account of its own: Intuit's help page "View retained earnings account details in QuickBooks", last updated August 3, 2026, says QuickBooks Online automatically adds the previous fiscal year's net income to Retained Earnings when a new fiscal year starts. There, the allocation debits that account instead of an income summary, leaving nothing of that year's result in it once both shares are posted. The same Intuit page notes that manually adding journal entries to the Retained Earnings account doesn't include them in reports. Before posting the allocation there, check the product's documentation for how to post it and how QuickBooks will show it; afterwards, check that the balance sheet shows each owner's capital account carrying their share.

What evidence and approval should sit behind each movement?

Each movement needs a record showing it happened, whose it was and who approved it:

• Contribution of money. Keep the bank record showing it came from that owner, with the date and amount both owners accept.
• Contribution of property. Keep a record that the business now holds it, with the agreed value and any debt taken over.
• Draw or distribution. Keep the bank record of the payment and the approval your agreement requires.
• Share of results. Keep the period's closed accounts and the signed sharing basis.

Keep it all with the business's books, not in one owner's files. Delaware's partnership act (section 15-403) and LLC Act (section 18-305) entitle partners and members, on reasonable demand for a purpose reasonably related to their interest and subject to those sections' other conditions, to information including each owner's cash and agreed value of property or services contributed, and the date each joined.

Your agreement sets who approves a distribution, and where it is silent your state's act supplies a default; AccountingTools' partnership accounting article notes that a partner's withdrawal may need the other partners' approval, depending on the agreement's terms. Record who approved each distribution and on what authority, and take a disagreement between you to your adviser.

Is money paid to an owner for work a draw?

In a partnership, not if the partners agreed to pay for that work. Money goes to an owner for one of three reasons, and each is recorded differently:

Delaware's section 15-401 gives a partner no right to pay for services to the partnership, except reasonable compensation for winding it up, so in a Delaware partnership whose agreement provides no pay, money a partner takes for their work belongs in their draws. Delaware's LLC Act draws a similar line: for its limit on distributions, section 18-607 does not count as a distribution reasonable compensation for present or past services. How any owner is paid, including how a corporation pays a shareholder for work, has its own related question; whether money an owner put in was a loan is a question for your accountant.

How is property or equipment contributed instead of money brought in?

Before recording it, establish that the business now owns the item. Ben's equipment is recorded like this:

Effort is different. Delaware's section 18-501 allows an LLC member's contribution to be services rendered, and the section 18-503 default counts contributions at their agreed value as stated in the LLC's records. Delaware's partnership default in section 15-401 credits a partner's account for contributions only with money and the value of other property, so in a Delaware partnership, effort enters a position only if the agreement provides for it; your own state's partnership act sets the rule for yours. How to record a contribution of effort is a question for your accountant.

How do we rebuild positions when nobody recorded whose money it was?

Work through the records in this order:

1. Pick a start date: the day the business began if the records reach back that far, otherwise the earliest date from which they are complete and at which both owners will sign an agreed position for each owner. Those positions must add up to total equity at that date.
2. From the bank statements and the ledger, list every movement between the business and either owner since then, including personal costs the business paid.

3. Attribute each item that a record ties to one owner, such as the personal account it came from or went to, a receipt or a message sent at the time. Then classify it by why it moved, using the table in the section on pay for work: a contribution or a draw goes to that owner's accounts, and a repayment reduces what the business owed that owner.

   Where it is unclear whether money an owner put in was a loan, leave it where it is, out of that owner's contributions, until your accountant has settled whether it was one.

4. Post what cannot be attributed to the unattributed owner movements account rather than splitting it by assumption. AccountingTools' suspense account article describes such an account as temporary storage for transactions whose correct account is uncertain, and says its items should be researched and eliminated by the end of the fiscal year.

   That article classifies a suspense account as a current asset or liability; this one sits under owners' equity because every item in it is an owner's movement, only not yet whose, and like that article's, it should be cleared by the fiscal year-end, by step 7's signed decision where the records fall short.

5. If an item from steps 3 and 4 is already in the ledger, for example in a single equity account or booked as an expense, move it: take it out of the account it was first posted to and record it where step 3 or 4 sends it. Post an item fresh only if it never reached the ledger.
6. Recalculate each past period's shares of results on the sharing basis in force in that period, settled as the table on where each owner's share comes from describes. Where those shares were already reported on the business's tax returns and your figures differ, tell whoever prepares the returns before posting.
7. Settle whatever is still unattributed by a written decision both owners sign, post it, and have both owners sign the rebuilt positions.

Rebuild on the same basis, cash or accrual, on which the books are kept.

What changes when an owner joins, leaves or changes share mid-period?

No Delaware section above sets how to divide a period's result around an ownership change. Use the method your agreement sets; if it sets none, everyone affected agrees one in writing before anything is posted, such as working out the result to the change date and rolling forward each part, and tells whoever prepares the business's tax returns. Each kind of change adds a step:

• Joining. By default, Delaware's section 15-401 admits a partner only with every partner's consent. Delaware's LLC Act, section 18-301, admits a new member not taking over an existing member's interest as the LLC agreement provides or, where it does not, with every member's consent. Open the newcomer's accounts from the admission date.
• Changing share. Record the new ratio and its effective date in writing, signed by both owners; under a split-period method, the result before that date is shared on the old ratio and after it on the new one.
• Contributions under an LLC default. Where an LLC's agreement is silent and a default like Delaware's section 18-503 applies, shares move each time a member's contribution is received or returned, not only when someone joins. Record the date of each, agree in writing before posting how contributions received or returned during a period are weighted, and ask your adviser whether a given distribution returns a contribution and whether contributions an incoming member takes over count as theirs.
• Leaving. Close the leaving owner's position at the leaving date; what they are paid is a pricing question, and how the buy-out is recorded is a question for your accountant.
• Shares changing hands in a corporation. Record the transfer in the stock ledger.

When should each owner see their own position?

At every period close, give each owner their own roll-forward with the movements behind it, and have each confirm it in writing or raise a query while the records are fresh. Keep open queries on a written list until settled, and have both owners sign the year-end closing positions before they are carried forward. In a corporation, give each shareholder a statement of their shares, what they paid and the dividends paid to them.