What are drawings?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
Drawings are money a sole trader or partner takes out of their business for personal use, such as transfers to a personal bank account or personal bills paid from the business account. They are not a business expense or wages. They are recorded in a drawings account, which lowers the owner's equity but leaves the profit figure unchanged.
Drawings are how a sole trader or partner pays themselves. Because the money is not a cost of running the business, it stays out of the profit and loss statement. The business's profit is worked out first, and drawings then reduce the share of the business that belongs to the owner.
In the books, drawings usually have their own equity account, with one for each partner in a partnership. Each transfer or personal payment is recorded there during the year. At the end of the year the balance is usually transferred to the owner's capital account, which goes up by their share of the profit and down by their drawings.
Drawings belong to sole traders and partnerships. A company is a separate legal entity from its owners, so money a director or shareholder takes out is not drawings. It is something else, such as wages, a dividend or a loan, and each is recorded differently. Ask your accountant which account fits the arrangement.
In Australia
business.gov.au's key financial terms describe drawings as personal expenses that are paid out of a business account.
business.gov.au's guidance on business bank accounts says that where a single account mixes personal and business banking, each personal payment or expense needs to be clearly marked in the cash book. It also describes separating business and personal transactions as a way to make income and expenses easier to track.
The ATO's record-keeping tips ask businesses to work out the business share of any expense that is partly private, and to record that share accurately.
Worked example
| Date | Details | Amount (AUD) |
|---|---|---|
| 5 Jul 2026 | Transfer to the owner's personal account | 2,000.00 |
| 19 Jul 2026 | Personal phone bill paid from the business account | 85.00 |
| 2 Aug 2026 | Transfer to the owner's personal account | 2,000.00 |
| 28 Aug 2026 | Family groceries paid on the business card | 164.30 |
| 4 Sep 2026 | Transfer to the owner's personal account | 2,000.00 |
| Total | Drawings for the quarter | 6,249.30 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Recording the owner's regular transfers to themselves as wages or another expense, which understates the business's profit.
- Calling money a company director takes out drawings, when it is wages, a dividend or a loan and needs its own account.
- Paying personal bills from the business account without noting them, so they end up among business expenses.
- Netting drawings against money the owner puts back in, so neither amount shows clearly in the books.
Related terms
Related service
Small business bookkeeping
Your books kept current, every month.
Sources
- Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Set up your business bank account
business.gov.au, Australian Government. Current at 15 October 2026, released 11 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Record-keeping tips
Australian Taxation Office. Current at 25 October 2022 (QC70730), released 25 October 2022. Checked 15 October 2026.
© Australian Taxation Office for the Commonwealth of Australia Licence: ATO website copyright notice (copy, adapt and distribute, without implying ATO endorsement).