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CatrianaUK
Level 2

Payments made from personal account - how do I properly record it?

Hi All

 

My name is Karen - really happy to join this community Smiley Happy

 

I have just setup in business on my own and need some advice with the initial recording of purchase invoices.

 

I'm pretty confident with the processes beyond this first few items, but don't want to start off in a pickle!

 

In simple terms, what I am trying to achieve is having all receipts allocated to the relevant suppliers and marked as paid.  I don't want to just show costs against the nominal code that have been paid by my DLA, I would like the actual purchase invoices setup on the correct supplier for ease of future reference.  I also need to show the value of my personal investment as a loan to be repaid to me ASAP.

 

  • I used my personal bank account and credit card to buy setup items and initial stock.  I have not linked these accounts to QB.  I now have a business account with Starling Bank setup and connected.

 

  • So far I have done the following:

 

    • Set up an account “Owner’s Equity” under the Equity Category
    • Set up an account “Loan Payable – Owner Karen *****” under Current Liabilities
    • Added a Supplier “Karen *****”
    • Created all stock items
    • Scanned in all receipts
    • Processed one Journal DB Professional Fees and CR my DLA.  (Not sure how I can then load this invoice on the Supplier Account and pay it?)

 

I'm confident with the process of uploading receipts, reviewing them and matching to bank payments with the connected business account.

 

Can anyone give me some advice how to look after the initial invoices please?

 

Many thanks

Karen 

 

Solved
Best answer May 15, 2021

Accepted Solutions
jamespaul
QuickBooks Team

Payments made from personal account - how do I properly record it?

Hello, Karen. 

 

We're also glad to have you in the Community space. I'm happy to help you out in setting up your company in QuickBooks Online. I'd like to take care of a few things first before we sort out your personal transactions for the business. 

 

To ensure your purchase invoices are recorded under the correct supplier, you would just need to code them under the correct Payee field.

 

sup1.PNG

 

For the personal investment, you're on the right track in making an equity account. You don't actually need to use a liability account. You would simply need to deposit the funds to the equity account. Then, pay the investment back with a cheque or an expense transaction. Here's how: 

 

  1. Click the + New icon, then select Bank deposit.
  2. Under the Account drop down menu, select the bank account you're depositing the money into.
  3. On the Add funds to this deposit section, enter the name of the investor (your Karen supplier profile in this case) in the Received from field.
  4. Select the equity account  you created from the drop down list in the Account field.
  5. Enter the investment amount in the Amount field.
  6. Click Save and close.

 

When you're ready to pay it back, you can record a cheque or an expense

 

A step-by-step reference can be found from this article: Record an owner's contribution or capital investment in your business.

 

Now, let's take care of the purchases from your personal accounts. You can create a bank and a credit card account in QuickBooks (you don't have to connect them). You would just need to track those transactions used for your business. 

 

Here's a step-by-step process:

 

  1. Go to the Chart of Accounts
  2. Click the New button.
  3. Whichever you want to record first, use Cash at bank and in hand for the Account Type. If you want to record the credit card first, use Credit Card
  4. Select the correct Detail Type, then enter a name for the account. 
  5. Once done, click Save and close

 

Next, you can start recording those transactions for your bank and credit card accounts. For credit card transactions, you would want to use an Expense transaction then ensure to use the Credit card account you created.

 

sup2.PNG

 

If you need help paying your credit card account, this article can guide you through the process: Record your payments to credit cards.

 

For bills and the subsequent payments, I would recommend checking out this article for a guide: Enter bills and record bill payments in QuickBooks Online.

 

Also, another way to record your personal transactions is to use a journal entry. This method is good if you want to reimburse those expenses: Pay for business expenses with personal funds.

 

Need to take care of your stocks in relation to the personal transactions? This article can help you out: Set up and track your stock in QuickBooks Online.

 

Ready to start working on other areas in QuickBooks Online? We have a bunch of helpful articles to guide you with the processes. Check them out from the Topics page (select a topic first, then look for an article). 

 

I'm still with you on your journey on making sure your business is set up properly in QuickBooks Online. Do you have other concerns? Let's hear them out and I'll reply to you with the details and information. 

View solution in original post

8 REPLIES 8
EmmaM
QuickBooks Team

Payments made from personal account - how do I properly record it?

Hello CatrianaUK Thanks for getting in touch with the Community, we're happy to help with the setup, it sounds like you have done a lot so far! To confirm the initial invoices you speak of is it the task of creating them you need assistance with? Do you have them in an excel format currently? Thanks

CatrianaUK
Level 2

Payments made from personal account - how do I properly record it?

Hi Emma

Thanks for your reply Smiley Happy

So I have scanned the invoices and that are waiting my review.  I'm ok with the process for invoices where the payment was made from my business account - it's just the ones where they were paid from my personal account that's not connected to QB I'm not sure how to process.

Many thanks

Karen 

jamespaul
QuickBooks Team

Payments made from personal account - how do I properly record it?

Hello, Karen. 

 

We're also glad to have you in the Community space. I'm happy to help you out in setting up your company in QuickBooks Online. I'd like to take care of a few things first before we sort out your personal transactions for the business. 

 

To ensure your purchase invoices are recorded under the correct supplier, you would just need to code them under the correct Payee field.

 

sup1.PNG

 

For the personal investment, you're on the right track in making an equity account. You don't actually need to use a liability account. You would simply need to deposit the funds to the equity account. Then, pay the investment back with a cheque or an expense transaction. Here's how: 

 

  1. Click the + New icon, then select Bank deposit.
  2. Under the Account drop down menu, select the bank account you're depositing the money into.
  3. On the Add funds to this deposit section, enter the name of the investor (your Karen supplier profile in this case) in the Received from field.
  4. Select the equity account  you created from the drop down list in the Account field.
  5. Enter the investment amount in the Amount field.
  6. Click Save and close.

 

When you're ready to pay it back, you can record a cheque or an expense

 

A step-by-step reference can be found from this article: Record an owner's contribution or capital investment in your business.

 

Now, let's take care of the purchases from your personal accounts. You can create a bank and a credit card account in QuickBooks (you don't have to connect them). You would just need to track those transactions used for your business. 

 

Here's a step-by-step process:

 

  1. Go to the Chart of Accounts
  2. Click the New button.
  3. Whichever you want to record first, use Cash at bank and in hand for the Account Type. If you want to record the credit card first, use Credit Card
  4. Select the correct Detail Type, then enter a name for the account. 
  5. Once done, click Save and close

 

Next, you can start recording those transactions for your bank and credit card accounts. For credit card transactions, you would want to use an Expense transaction then ensure to use the Credit card account you created.

 

sup2.PNG

 

If you need help paying your credit card account, this article can guide you through the process: Record your payments to credit cards.

 

For bills and the subsequent payments, I would recommend checking out this article for a guide: Enter bills and record bill payments in QuickBooks Online.

 

Also, another way to record your personal transactions is to use a journal entry. This method is good if you want to reimburse those expenses: Pay for business expenses with personal funds.

 

Need to take care of your stocks in relation to the personal transactions? This article can help you out: Set up and track your stock in QuickBooks Online.

 

Ready to start working on other areas in QuickBooks Online? We have a bunch of helpful articles to guide you with the processes. Check them out from the Topics page (select a topic first, then look for an article). 

 

I'm still with you on your journey on making sure your business is set up properly in QuickBooks Online. Do you have other concerns? Let's hear them out and I'll reply to you with the details and information. 

View solution in original post

CatrianaUK
Level 2

Payments made from personal account - how do I properly record it?

Hi

 

Thank you so very much for your help.  Sorry for the delay in coming back.

 

I have followed the steps as directed and feel much more comfortable with my records now. 

 

Just one question:

  • I have receipts for stock purchases.  These items have already been saved as Stock Items with a value. Should I record these as simply Purchases, Cost of Sales, or Stock Asset?  I'm assuming if I use Stock Asset I'll be duplicating the value?

 

Thank you for the extra links, they will be really helpful.

 

Really pleased I chose Quickbooks Smiley Happy

 

Thanks

Karen

CatrianaUK
Level 2

Payments made from personal account - how do I properly record it?

Hi

 

Sorry another question!

 

I have made one sale (woohoo, my first!) through Amazon.  The funds sit in the Amazon account and are paid out fortnightly, however Amazon tend to hold back funds in case of any refunds.  

Should I setup a bank account called Amazon where sales proceeds can sit, then once a payment is transferred to my business bank account, I can do a transfer?

 

Many thanks

Karen 

Ashleigh1
QuickBooks Team

Payments made from personal account - how do I properly record it?

Hello CatrianaUk, so you can set up an account for amazon sales and one for amazon frees in the chart of accounts section and then when the money is transferred from amazon and then hits the bank account you can do a sales receipt to undeposited funds and then minus off the fees or split the fee. 

venniepalmer
Level 1

Payments made from personal account - how do I properly record it?

Hi all,

My name is Vennie and I recently setup my account as well. What if there is no invoice? What if I am paying an individual?

Rea_M
QuickBooks Team

Payments made from personal account - how do I properly record it?

I've got your back in recording your payments in QuickBooks Online (QBO), @venniepalmer. This way, you can keep your newly set up account updated and manage expenses accordingly.

 

When you've paid an individual with no invoice, you can either record a cheque or expense transaction. With this, you can report it as an expense and a payment simultaneously. To learn more on when to record any of the transactions mentioned, you can check out this article: Learn the difference between bills, cheques, and expenses in QuickBooks Online.

 

If you want to record a cheque, here's how: 

  1. Go to the + New button.
  2. Select Cheque.
  3. Choose the Payee from the drop-down.
  4. From the Bank account drop-down, select the account the cheque withdraws money from.
  5. Complete the cheque fields you need.
  6. Select the Print option.
  7. Click Save, Save and close, or Save and new. This adds the cheque to your bank register. 

If you opt to record an expense transaction, you can check out this article for the step-by-step guide: Enter expenses in QuickBooks Online. It also includes details about managing expenses in QBO.

 

Once you're done, I'd recommend pulling up the Transaction Detail by Account report. This way, you're able to verify that the expense transaction you've entered is recorded accordingly. Go to the For my accountant section from the Reports menu's Standard tab.

 

QBO provides a variety of financial reports to give you a snapshot of your business. You can customise them to focus on the details that matter the most to you. Then, memorise them to save their customisation settings for future use. 

 

Also, I'm adding this article to further guide you in managing your business's growth using QBO: QuickBooks Help Articles. It includes topics about account management, banking, and expenses, to name a few. You can click the + More topics button to view other selections.

 

Let me know if you have other concerns about managing business expenses and payments in QBO. You can drop a comment below, and I'll gladly help. Take care, and I wish you continued success, @venniepalmer.

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