Overview
Owner and equity transactions can look similar in your bank feed, but they need to be categorized correctly so your financials stay clean.
In Puzzle, you can handle this by:
Creating the right Equity accounts in your Chart of Accounts
Categorizing transactions directly from Integrations
Using split transactions when a transaction needs to be split across multiple accounts
Step 1 — Determine the correct Account Category (Based on Entity Type)
If you are an LLC
Use Other Equity for:
Member Contributions
Member Distributions
Member Capital
Do not use:
Retained Earnings (usually system-managed)
Common Stock / Preferred Stock (not LLC equity)
If you are a C-Corp
Use these categories depending on the activity:
Common Stock
Issuing common shares (founders, employees, investors)
Preferred Stock
Issuing preferred shares (common in venture-backed companies)
Other Equity (may appear as Other Equity depending on your COA structure)
Amount paid above par value when issuing stock
Money paid out to owners/shareholders
Retained Earnings
Accumulated net income over time (often system-managed)
If you are an S-Corp
Use:
Common Stock
Owner equity (stock issued)
Other Equity
Additional owner funding beyond stock basis
Owner withdrawals/distributions
Retained Earnings
Accumulated profit (often system-managed)
Step 2 — Create the Accounts in Puzzle
If the account you need doesn’t exist, create it first.
Steps
Go to Accounting
Click Chart of Accounts
Select + Add account
Select + New parent account
Choose the correct Account Category (from Step 1)
Select Equity as Account Type
Name the account and give it an ID
Click Submit
Step 3 — Categorize Transactions from Integrations (Fastest Workflow)
Once your accounts are created, you can categorize transactions directly from your connected feeds.
Steps
Go to Transactions
Select Bank & Credit Card
Click the transaction you want to categorize
Choose a Category
Select your new equity account (example: Member Distributions or Shareholder Distributions)
Finalize
✅ Tip: This is the quickest way to start using new equity categories without needing journal entries.
When to split a transaction?
Use a journal entry when one transaction should impact multiple accounts.
Example: Owner pays a business expense personally
If an owner pays $500 for business travel on a personal card, categorizing it only as:
Travel Expense
does not automatically reflect that the owner funded the business.
Instead, you may want to record:
$500 → Travel Expense (P&L)
$500 → Member Contribution / Paid-in Capital (Equity)
This keeps expenses accurate while tracking owner funding properly.
How To Split A Transaction
Quick Decision Guide
Scenario | LLC Category | C-Corp Category | S-Corp Category |
Owner puts money into the business | Member Contributions | APIC / Paid-in Capital | APIC / Paid-in Capital |
Owner takes money out | Member Distributions | Shareholder Distributions | Shareholder Distributions |
Issuing shares | N/A | Common Stock / Preferred Stock | Common Stock |
Tracking accumulated profit | Not manual | Retained Earnings | Retained Earnings |
Best Practices
Keep owner/equity activity out of operating expense categories unless it’s truly a business expense.
Separate contributions and distributions into different accounts for easier reporting.
If you’re unsure whether something should be stock vs APIC vs distributions, confirm with your accountant—then mirror that structure in Puzzle.