Personal Expenses

Hi Eric,

I don't know the answer (sorry) but I do know that mixing personal and business expenses can put you at serious financial risk. Here's how and why.

Normally, having an incorporated business protects your personal assets from liability. So if a customer sues you for something, they can try to take your business assets but not, for example, your house. However, if a lawyer subpoenas your business transactions and can show that you have intermingled your personal finances with your business, a court can rule that you are operating as a sole proprietor (despite being incorporated) and allow the person suing you to make claims against your personal assets.

You can learn more about this by search the web for "piercing the corporate veil".

Sorry for being nosey and not having the answer you're looking for, but hopefully it this was helpful in a better way!

Mike

Thanks, Mike! You make some interesting points. I’m a sole proprietorship, selling 100k gross per year on eBay. Average sale, $35.  I purchase things for myself on a credit card. The proceeds I earn from eBay I use to pay my credit card down. So like: I buy some worms for fishing for $5. That’s not for the business; it’s for my own enjoyment, fishing. With what I sell from eBay I pay the credit card down. The credit card debt is both personal and business-related. I have no idea what category in QBO I put that $5 purchase of worms. I want to do the right thing, but I haven’t yet figured out what that right thing is. 

half a year later, still no answer

another half a year later, still no answer. I have the same problem too.

(EDITED)

Solved: How to manage personal expenses - Is it better to exclude personal transactions or list them...

I don't know if it answers your question but still, I'll drop it here.

@Anonymous31 & @ericmday 

The original question was how to record personal expenses charged to a business credit card.  Presumably, this means that you are paying down the credit card out of the business account, correct?  If that's the case, then the charges should be booked to your 'Owner's Capital' equity account.  Some people use an 'Owner's Draw' equity account, but technically, you just need an Owner's Capital equity account.  That keeps the charges off of your P&L which is what you want. 

The other option is to pay down the credit card with funds from your personal bank account for the personal expenses.  That way, you can leave the charges out of QB entirely.