I've been buying items for the business including materials for making products, equipment, office supplies using my personal credit card. how do I enter these transactions?
Thank you for your help.
You will want to record these purchases as an Owner Contribution to the business. Go to your Chart of Accounts and enter the following accounts. First = Owner Capital Account (Equity type) and also two subaccounts called Owner Contribution and Owner Draw. When you purchase the items make a journal entry that you Debit the expenses, such as office supplies, and Credit the Owner Contribution account. If the business pays you back = write a check using the Owner Draw Account in the account section at the bottom of the check. This will get you by in the meantime - but at tax time I would speak to your accountant if they would prefer that you loan the business money and collect interest from the business on what you loan it. This is a good tax time talk to have with your accountant since they know how you are organized and of course the Canadian tax laws. Hope this helps! : )
But what if I haven't paid myself back and they are still entered as unpaid bills? How do I get this off of my Balance Sheet and P&L because it looks as if my accounts payable is big negative number