Accounting for Inventory Purchased Personally

Hi RaulUK Thanks for reaching out to us here on the Community. We recommend that you account for the loan from yourself to the business as a loan and account for the purchases of the stock as expenses or bills. 

To account for the loan you would: 

select accounting > chart of accounts > new > account type will be current liabilities, if the amount is to be paid back within 12 months, if not then select Non current liabilities > in the detail type select current liabilities, if the amount is to be paid back within 12 months, if not select long term borrowings > enter a name > save and close.

When you send your business the money/the business receives it into it's bank account you will:

create a bank deposit from New+ > in the account field in the top left ensure that you've selected the bank that the amount was received to and the corresponding date in the date field > in the received from column, within the 'add funds to this deposit' section, enter/create you as a supplier, however this isn't mandatory > in the account column enter/select the liability account you created above. in the amounts are field select No VAT.

When the business pays you the amount back, or a proportion of it, you will

create an expense select the New+ icon > expense > enter/create you as a supplier in the payee field > in the payment account select the bank account the amount is being paid from > in the date field select the date the amount was debited from the business account > in the category column enter the liability account you created earlier > enter the amount of the loan in the amount column > in the amounts are field select No VAT > save and close.

Thanks, John. I think where I'm a bit stuck with your reply is that I won't be sending the company any money.

I used my personal money to purchase stock. All I really want to do is account for that and make sure it's on the books for the business to pay it back.

I tried following a video I found last night (https://quickbooks.intuit.com/learn-support/en-us/help-article/journal-entries/pay-business-expenses...) but unfortunately, that didn't work as I was being forced to select the account type instead of being able to leave it blank as the video explains.

I ended up creating a journal entry instead, whereby:

Line 1. Debit £XXX to Inventory

Line 2. Credit £XXX to Owner's Equity account

Which seems to be what the video was ultimately trying to achieve. :face_with_tears_of_joy:

Hi RaulUK Is the business going to pay you the amount back?

Yup. There's no timeframe, etc. attached so to be paid back as and when.

Thanks RaulUK, in this case, you can create two accounts in your chart of accounts: one for your personal bank account and a separate non-current liability account. to track the money owed. You'd then record the transaction using the bank deposit as described above. If you're unsure on the specific categorisation, we'd recommend reaching out to your bookkeeper/accountant for further advice :folded_hands: