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Level 1

Shareholder Out of Pocket Expenses

The owner and sole shareholder has been using his personal credit cards, cash and debit card to pay for company expenses (taxi, meals, etc).   He also writes cheques to himself which has been recorded under shareholders.  What is the best way to record the out of pocket expenses that are business related? 

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Best answer 03-11-2019

Accepted Solutions
Level 3

There are several ways.  One is the "zero-dollar cheque"....

There are several ways.  One is the "zero-dollar cheque".

Enter a cheque payable to the owner.  Post the expenses to appropriate accounts on the Expenses tab with the appropriate tax codes.  Add one more line on the Expenses tab, posted to the Shareholder Loan account, tax exempt, and enter the total as a negative amount so the net amount of the cheque will be zero.  Be sure the cheque is not marked "To Print", and enter something meaningful in the cheque number field ("debit card", "credit card", "expenses", for example).  Print on blank paper if you want, not on a company cheque.

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3 Comments
Level 3

There are several ways.  One is the "zero-dollar cheque"....

There are several ways.  One is the "zero-dollar cheque".

Enter a cheque payable to the owner.  Post the expenses to appropriate accounts on the Expenses tab with the appropriate tax codes.  Add one more line on the Expenses tab, posted to the Shareholder Loan account, tax exempt, and enter the total as a negative amount so the net amount of the cheque will be zero.  Be sure the cheque is not marked "To Print", and enter something meaningful in the cheque number field ("debit card", "credit card", "expenses", for example).  Print on blank paper if you want, not on a company cheque.

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Anonymous
Not applicable

Record them in the owner's equity account (which will inc...

Record them in the owner's equity account (which will increase it as it increases company expenses.)

Level 3

If the company is incorporated, as appears from the quest...

If the company is incorporated, as appears from the question ("shareholder"), there should not be an owner's equity account.