how to book partial utilities expense from personal bank account

ElenaP1 · ‎July 02, 2023

I'm trying to allocate 1/3 of my home wifi bill to business expense in QBO. The payment is made through my personal checking. How would I journal that? Thank you.

Mich_S · ‎July 02, 2023

I can walk you through keeping track of your business expense through your personal checking account, @ElenaP1.

We'll have to first take note of the expenditure in QuickBooks Online by creating a journal entry. After that, let's reimburse the money used. We can do it as a check or an expense. Let me show you how:

To record the business expense you paid for with personal funds:

Go to + New.
Choose Journal Entry.
On the first line, pick the expense account for the purchase.
Enter the purchase amount in the Debits column.
On the second line, select Partner's equity or Owner's equity.
Enter the same purchase amount in the Credits column.
Click on Save and close.

To reimburse your personal checking account:

Option 1: As a check

Click on + New.
Hit Check. Or if you're in the Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
Pick a bank account to use to reimburse the personal funds.
Go to the Category column, and choose Partner's equity or Owner's equity.
Type in the amount to reimburse.
Select Save and close or Save and new.

Option 2: As an expense

Select + New.
Select Expense.
Select a bank account to use to reimburse the personal funds.
In the Category column, select Partner's equity or Owner's equity.
Enter the amount of the reimbursement.
Select Save and close.

Here are some extra articles about handling checks and expenses:

I'm just one post away if you need a hand with this topic or any other QuickBooks-related concerns. I'll be here to help. Take care!

View solution in original post

Mich_S · ‎July 02, 2023

I can walk you through keeping track of your business expense through your personal checking account, @ElenaP1.

We'll have to first take note of the expenditure in QuickBooks Online by creating a journal entry. After that, let's reimburse the money used. We can do it as a check or an expense. Let me show you how:

To record the business expense you paid for with personal funds:

Go to + New.
Choose Journal Entry.
On the first line, pick the expense account for the purchase.
Enter the purchase amount in the Debits column.
On the second line, select Partner's equity or Owner's equity.
Enter the same purchase amount in the Credits column.
Click on Save and close.

To reimburse your personal checking account:

Option 1: As a check

Click on + New.
Hit Check. Or if you're in the Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
Pick a bank account to use to reimburse the personal funds.
Go to the Category column, and choose Partner's equity or Owner's equity.
Type in the amount to reimburse.
Select Save and close or Save and new.

Option 2: As an expense

Select + New.
Select Expense.
Select a bank account to use to reimburse the personal funds.
In the Category column, select Partner's equity or Owner's equity.
Enter the amount of the reimbursement.
Select Save and close.

Here are some extra articles about handling checks and expenses:

I'm just one post away if you need a hand with this topic or any other QuickBooks-related concerns. I'll be here to help. Take care!

ElenaP1 · ‎July 02, 2023

Thank you for your input. This assumes that I have my personal checking added to the books. What if I don't want to add my personal account to the QBO? Is it possible to just credit cash or create another account that would indicate that the payment was made through an external source?

MJoy_D · ‎July 02, 2023

You're welcome, @ElenaP1. It's our pleasure to help!

I can share some information about the account you can use when recording the payment.

Yes, you can use your personal bank account when recording the reimbursement through a check. You can go to the Chart of Accounts to create a clearing account. This account can be used when recording the reimbursement.

Here's how:

Go to the Gear icon (⚙) and select the Chart of Accounts.
Click on New. Depending on your account view, you’ll either see a panel labeled New account or New category.

For detailed guidance about the next steps you'll perform based on your view, check out this article: Add an account to your chart of accounts in QuickBooks Online.

You can also check this article for more details about setting up a clearing account. Although it’s for QuickBooks Desktop (QBDT), it also applies to QBO: Set up a clearing account.

It'll also be best to consult an accountant to get an advice on how to record this transaction.

Here's also more information about manually adding transactions to account registers in QuickBooks Online. It'll guide you with adding transactions directly to the bank register like journal entries, checks, deposits, and many more.

Let me know if you need more information about making payments in QBO. I'm always here to answer them for you. Have a great rest of the day!

ElenaP1 · ‎July 15, 2023

Hi and thank you for the break down. I'm just wondering why I would need to use the owner's equity account at all. Is it not possible to debit the part of the expense that was used for business and payed with the business bank account, and credit the business account itself manually by using a journal entry? Or just adding it manually by creating a new bank transaction? Sorry, I'm really new at this. What is the significance of using owner's equity account and what effect will it have on the books? Thank you.

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how to book partial utilities expense from personal bank account