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I'm wondering about the pitfalls of tracking my personal expenses through my Quickbooks Online that I track my company through.
Any thoughts?
Solved! Go to Solution.
You should avoid mixing personal and business, although it is common practice. Not every business starting out can establish pure business banking and credit so many times it is unavoidable. There are times even when expenses are shared or split between business and personal, such as a home office and allocating a percentage of utilities and taxes as a quick example.
If you are an S corp, avoid it at all costs, if a multi member LLC also avoid
If you are a single member LLC or a Sole Proprietorship here is what you need to do to keep track separately of personal and business.
Set up your equity accounts for Equity, Draw, and Contribution. Make all three of these sub accounts of a master Equity account that you never post to and acts as a summing account of the other three. Record all personal money put into the business as a Contribution, post all money taken out as Draw, and this INCLUDES any time the business pays for a personal item, not only when you write yourself a check.
Keeping all the above in mind, Intuit does offer a FREE personal finance program called Mint that is a better place to keep track of your personal life
You should avoid mixing personal and business, although it is common practice. Not every business starting out can establish pure business banking and credit so many times it is unavoidable. There are times even when expenses are shared or split between business and personal, such as a home office and allocating a percentage of utilities and taxes as a quick example.
If you are an S corp, avoid it at all costs, if a multi member LLC also avoid
If you are a single member LLC or a Sole Proprietorship here is what you need to do to keep track separately of personal and business.
Set up your equity accounts for Equity, Draw, and Contribution. Make all three of these sub accounts of a master Equity account that you never post to and acts as a summing account of the other three. Record all personal money put into the business as a Contribution, post all money taken out as Draw, and this INCLUDES any time the business pays for a personal item, not only when you write yourself a check.
Keeping all the above in mind, Intuit does offer a FREE personal finance program called Mint that is a better place to keep track of your personal life
hello
I just started with a company and their books are messed up I tried to reconcile the bank and credit card accounts. i decided to start with a small credit card account. the person who did the books first excluded all transactions that were personal. So I have a amount i cannot reconcile. is there any way i can move the amount to an equity account after i set it up. They pay for the personal and business with different cheques.
thank you
pliz1705
Hi there, pliz1705.
You can record the payments made by your personal or business accounts by creating a Journal Entry. Just a heads up, this action will affect your equity account. That said, I'd recommend reaching out to your accountant so you'll be guided in recording this one without messing up the file.
I've added this detailed information as your guide in tracking the payments: Mixing business and personal funds.
Keep me posted whenever you have other concerns. Stay safe!
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