Used personal cash for business expenses, now balance sheet is skewed

5 replies
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Hello,

When I set up QBO I had already started my business and used personal funds to pay startup and continued to do so for some ongoing expenses (health insurance premiums).

So I used a "Cash" account to record the expenses, and all seemed OK until I recently worked with LegalZoom Tax folks on upcoming estimated tax payments - the Cash account is reflecting a negative balance and skewing my Balance Sheet.

The LZ folks said that I needed to get with a QBO Pro to clean up the transaction and that it wouldn't take long or be hard to do, but figured Id reach out here before I go that route.

Any assist would be greatly appreciated.

Thanks.

QuickBooks Online

Pete_Mc

Level 5

The Legal Zoom people couldn't walk you though this????

Look in your Chart of Accounts and see if you have a Owner Equity Account and even better, two Sub Accounts for Owner Contribution and Owner Distribution. If they don't exist, create them. The type when you set up the new account is Equity.

The Deposits into the Cash Account should be associated with the Owner Contribution Acct. Then, assuming you actually paid the expenses with the checks, then you should have shown a Transfer from the Cash Account to your Checking Account.

Going forward, you don't need to use this "Cash" Acct if you need to put cash into your business. Just make a Deposit into you Business Checking and attach it to the Owner Contribution Acct.

S_E12Author

Thanks for the reply.

I only had "Owner Draws" and "Owner Investments" - would these be the same as the ones you suggested?

Would I change the expenses that I have in there under the 'Cash' account to 'Owner Contribution / Investments'?

I have not yet reimbursed the funds back to my personal account, so would they just stay in as expenses?

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