I am in the start-up phase of my business and have some expenses from last year that I am trying to get a report for tax purposes. When adding expenses for last year, anything I charged to my personal credit card, I listed under credit cards, versus what I paid out of pocket direct from my bank account. When I run the balance sheet, these credit card charges now look like liabilities... but I have paid them all off using funds from my bank. Should I have listed these as bank funds since it is a personal card and I am not planning on linking this card to QB? This way all these expenses end up in Assets rather than Liabilities?
Hello JLPikor. The company needs to reimburse you for those "expenses" paid out of your perosnal pocket. A simple check to yourself suffices. Also you need to determine if any of those "expenses" are actually company assets like computers, tools, machinery, furniture, etc. If anything you bought falls into those categories they have to be depreciated over time or Sect 179 deduction taken. Little stuff like office supplies are expensable right away. Best if you delete all those credit card charges from QB. Or as an alternative you use the personal credit card as a company card and the company pays the CC bill (or it's share of it). Having all your receipts is what matters in an audit. P.S. not necessary to get a new card for a small biz like yours. If you go to apply for a company credit card it's still based on your SSN and impacts your credit score. Waste of time unless you really need more available credit. Cheers!