How do you account sweat equity?

Answer 1

Sweat equity is the value of work done. If you value your effort at 20$ per hour and you worked 100 hours, then you have a value of 2,000$. This equity can be treated as an intangible asset. You could create an account called "Sweat Equity" and debit it for 2,000$. Sweat equity can be treated by you if/when you sell your company as part of the value of your company. From an accounting standpoint, it would be added to the sales price of your company & considered/treated as 'goodwill' in the new owner's accounting system.