cancel
Showing results for 
Search instead for 
Did you mean: 
Alith
Level 1

Correct process for handling purchase order bills paid for using the owners personal funds and how to reimburse the owner correctly in QB (using online bank transfer)

Hello

 

I'm looking for assistance as I have seen numerous ways suggested online to reimburse an owner for purchase orders they have paid for, and I do not know which is the correct method.

 

Scenario - Part 1 - Create and pay for a purchase order using my own personal, non company, funds.

  1. 1. I raise a purchase order in QB online for some products. E.g. 10 x $10 hats  $100
  2. I then create the bill for the purchase order when the goods are received.
  3. I then pay for the bill using my personal credit card. In the payment I insert the payment details selecting a Bank account called "Owners Bill Payments" to track that this was paid by my personal account.

 

Scenario - Part 2 - Reimburse / transfer funds back to myself in QB online

(TBC - See my question below to confirm correct process)

 

Scenario - Part 3 - Transfer the money from the business bank account back to my personal bank account

  1. I then transfer the $100 from my business bank account via online banking back to my personal account.

 

My questions are 

  1. Is Part 1 the correct way to capture that I have paid for the purchase order items
  2. What process do I then use in Quickbooks to have the funds correctly transferred back? Can I simply create a 'New transfer' in quickbooks to transfer $100 from my "cash and cash equivalents" business bank account to my 'Owners Bill Payments' bank account in QB?

 

I keep seeing references to expenses and cheques but I do not think that applies to purchase orders and reimbursement via online bank transfer.

 

Recommendations are appreciated.

 

3 Comments 3
Ethel_A
QuickBooks Team

Correct process for handling purchase order bills paid for using the owners personal funds and how to reimburse the owner correctly in QB (using online bank transfer)

Hello there, @Alith.

 

I'll help you record the business expense paid using personal funds.

 

You can write a check or enter an expense to reimburse the money. Before doing so, record the expense using a Journal entry.

 

Here's how:

 

  1. Click + New, then select Journal Entry.
  2. On the first line, select the expense account for the purchase.
  3. Enter the purchase amount in the Debits column.
  4. On the second line, select Partner's equity or Owner's equity.
  5. Enter the same purchase amount in the Credits column.
  6. Select Save and Close.

 

I also recommend consulting your accountant as they know what accounts to debit and credit on the journal.

 

Then reimburse the money by writing a check or entering an expense.

 

Here's how:

 

  1. Click + New, then select Journal Entry.
  2. On the first line, select the expense account for the purchase.
  3. Enter the purchase amount in the Debits column.
  4. On the second line, select Partner's equity or Owner's equity.
  5. Enter the same purchase amount in the Credits column.
  6. Select Save and Close.

 

If there are other instances where you may need to mix personal and business funds, you can read these articles for more information about the process:

 

 

Don't hesitate to let me know if you have questions about paying business expenses using personal funds. I'm always here to help. Have a great day.

Alith
Level 1

Correct process for handling purchase order bills paid for using the owners personal funds and how to reimburse the owner correctly in QB (using online bank transfer)

Hi there, thanks for your response ive seen references to handling regular expenses, but it's not just an expense i am refering to. It's a purchase order for inventory in quickbooks that I am paying using my own card.

 

If I process the purchase order and pay the bill using an owner equity bank. How should I then proceed?

 

If I do another separate expense as you recommend would I not be then be incorrectly doubling up the costs for the business? That doesn't seem quite right.

 

 

RCV
QuickBooks Team
QuickBooks Team

Correct process for handling purchase order bills paid for using the owners personal funds and how to reimburse the owner correctly in QB (using online bank transfer)

Thanks for coming back, Alith.

 

Going back to your first post, Scenario Part 1, 2, and 3 will work on your end for handling purchase order bills paid for using the owner's personal funds. Another way to record the transaction is to create a journal entry where the Debit is A/P and the credit is Equity since you already created a bill. I also recommend consulting your accountant as they know what accounts to debit and credit on the journal. See the screenshot for your reference:

 

 

 

Once done, pay the bills to link the journal entry and bill. See the screenshot below:

 

 

 

You can check out this article for more details about managing bills: Enter and manage bills and bill payments in QuickBooks Online. If you need help reconciling your bank or your credit card statements, feel free to use this article as a reference: Reconcile an account in QuickBooks Online.

 

I'm also willing to answer any other additional questions you might have in QuickBooks Online. I'm always here to help. You have a good one.