Skip to main content

SUMMER SAVINGS 90% OFF QuickBooks for 3 months* Ends 8/27

Buy now
Switch to QuickBooks and 70% off for 3 Months
Talk to Sales: 877-683-3280
Hours
Mon - Fri, 5am - 6pm PST
Sat - Sun, 7am - 4pm PST
Product support & help
Need help signing in?
SteveSteveSteve
May 12, 2021
Question

Reporting biz expenses made from a personal account as an LLC

  • May 12, 2021
  • 3 replies
  • 92 views

Hi,

 

New QB user here.

 

I own a small LLC, no employees, and I'm currently filing for 2020. I have a few business accounts which carry most of the expenses, but before the main biz account was created, I had to pay for a good amount of things on my personal checking account. And as you can guess, there was a decent amount of overlap afterwards even tho I did my best to only use the biz account exclusively (this was a messy year...); 

 

I've read many things on here that make me feel I shouldn't link the personal account even for that specific period, and file the expenses as owner's investment, no need to reimburse. Not sure what to do as of now

 

Can I add the personal account and list all the biz expenses made for a strict period (jan 1st - dec 31st 2020)? Is that kosher?

 

Also, half of those expenses are job supplies/store rent that I really want to declare, but I also have another half which is biz meals  - is that a problem those were paid via this personal account? If so then that's fine, but I'd love to account for all the rest

 

After that I'd obviously love to keep all expenses on the right account, moving forward

 

Thanks for your help!

3 replies

MirriamMQuickBooks Team
QuickBooks Team
May 12, 2021

Welcome to the QuickBooks family, @SteveSteveSteve.

 

You're right that in QuickBooks, we do not recommend mixing business and personal funds to avoid situations like this. In your case, you can record a capital investment to track the money going into your business. Before doing so, I recommend reaching out to your accountant to ensure that your account stays accurate.

 

To record capital investment, here's how:

  1. On your QuickBooks Online (QBO), set up an equity account.
  2. Record a deposit into your equity account if the bank is not connected. If connected, categorize the transaction associated with your deposits.
  3. Pay back the funds from the investment. 

For more information about this, see the below articles:

Please let me know if you need clarification about this, or there's anything else I can do for you. I'll be standing by for your response. Have a great day.

    SteveSteveSteveAuthor
    May 15, 2021

    Thanks @MirriamM,

     

    The money spent on the personal account doesn't have to be paid back, so I can just record a deposit that equals or is higher than the total of the expenses, then list all the expenses (the personal account isn't connected)?

     

    Also, do i have to create a journal entry as shown in the support link you posted? The video in said link doesn't show that and just tallies expenses

     

    And in the Chart of Accounts, there's already two account, Owner's Investment and Owner's Pay & Personal Expenses - which one should I put the deposit in?

     

    Thanks!

    Rea_M
    Level 10
    May 15, 2021

    Thanks for getting back to us, @SteveSteveSteve.

     

    You're already on the right track in recording the money you've spent using a personal account. Let me guide you on the next steps you need to complete the process.

     

    When there's no need to pay back the money spent on a personal account, you still have to create a journal entry (JE). This way, you're able to record your deposit and list all the expenses using a personal account. Before doing so, I encourage you to reach out to your accountant to ensure your financial data is accurate and select the appropriate account for your deposit.

     

    Whenever you're ready, here's how:

    1. Select + New.
    2. Select Journal entry.
    3. On the first line, select the expense account for the purchase.
    4. Enter the purchase amount in the Debits column.
    5. On the second line, select the appropriate account.
    6. Enter the same purchase amount in the Credits column.
    7. Select Save and close.

     

    I've attached a screenshot below that shows the last five steps.

     

    If you wish to know more about recording personal money you use for your business, you can refer to this article: Record an owner's contribution or capital investment in your business.

     

    While it isn't advisable to mix personal and business funds, you may encounter situations that will require you to do so. To guide you further in recording such transactions, I'd recommend checking out this article: Mixing business and personal funds.

     

    In case you have other clarifications about recording personal money you used for your business, feel free to drop a comment below. I’m always here to help. Take care.

    Need QuickBooks guidance?
    Log in to access expert advice and community support instantly.
    Terms & ConditionsAccessibility statement