Currently, when entering an Expense or Bill, the Expense Account (account to be debited) allows for accounts in any of these categories to be chosen:
- COGS
- Expense
- Other Current Liability
- Fixed Asset
- Other Current Asset
Noticeably missing are Equity Accounts.
Why is this? Why can't an equity account be debited in a transaction like this?
There are two very common use cases that necessitate this being available.
- Owner draws as part of payroll - In my case, there is one split transaction to a payroll provider that includes payroll expenses, debits to employee withholding accounts, benefit expenses, and owner draws. The latter is the only one not available.
- Expenses paid by the business that are really owner draws - A perfect example is the owner uses the company business card to make a personal purchase. Most accounting software just allows the expense to debit the Owner Draw equity account, but that's not possible with Zoho Books.
I can't think of a single good reason to not allow debits against Equity accounts from those types of transactions.
More broadly, Zoho Books seems to have artificial account restrictions like this that don't make a lot of sense.