For a business owner, recording purchases can be tricky ... especially when you use your own money to buy things for your business, or when you use your business money to buy things for yourself. Fortunately QuickBooks can handle both scenarios.
Create a New Check
First, do you want to be reimbursed for money spent? If so, the easiest thing to do is write yourself a check. From the Home Screen, click the plus sign, and beneath Vendors, select Check.
Enter Check Details
First, type your name. If your name isn’t in QuickBooks yet, add yourself as a Vendor.
Choose an account to categorize what you purchased.
Type a description of the purchase if you want.
Type an amount for the purchase.
Then enter a check number. If you’re not handwriting a check, click the box to Print later.
Lastly, record the check by clicking Save and close or Save and new.
Record Transaction as a Business Contribution
But let’s say you don’t want to be reimbursed for your purchase. In this case, you should record the transaction as a contribution to your business. The process is mostly the same.
Start by entering the same details on the Check form. Then, in the account entry just below what the owner bought, type Owner’s Contribution into the box and select Add Owner’s Contribution at the top of the drop-down menu options available.
In the Account setting modal, change the Category Type to Equity.
For Detail Type choose either Owner or Partner Distributions. Then click Save in the bottom right to save your settings and close the Account modal.
Back on the main check menu, enter the amount the owner invested as a negative amount.
This check is zero, so it won’t affect your business checking account … but it does record what the owner contributed to the business. To reflect this, type “ZB” for zero balance or something that lets you know this isn’t an actual check. Save the check when you’re finished.
Record a Personal Use Transaction
Now, let’s say you bought something for personal use with the business credit card. Click the Plus menu, and beneath Vendors, select Expense.
Choose a payee or add a new one, then select the credit card you used.
Add a new Owner’s Equity account and name it Owner’s Draw. This is the opposite of a contribution. You’ll use this account to record the money or value you’re taking from the business.
In the Account modal, select Equity for your Category Type, set the Detail Type as an Owner’s Equity account, and finally, name the account Owner’s Draw.
One important thing to keep in mind is that you should always keep your personal and business transactions separate. If you withdrew money from your business for personal use, this should be recorded as an Owner’s Draw. And if that’s the case, we have another video for that.
And that’s it for Recording Owner Transactions. Now it’s your turn! If the owner used personal funds for business use—or vice versa—try recording it in QuickBooks!
Add a Description and an Amount for the Owner’s Draw transaction, then Save the transaction.