Credit Card Reconciliation

chornaday · ‎September 18, 2024

I have a client that charges both personal and business expenses on a credit card. I have told her she should only charge business expenses and use another cc for personal, but she hasn't started that segregation to date.

She will only give me the business charges and payments on a credit card in order to show the expense on the P&L. The issue is the credit card balance is incorrect on the balance sheet. If anyone has run into this, how have you dealt with this issue from an accounting standpoint? Any insight will be greatly appreciated.

Anonymous · ‎September 18, 2024

I appreciate your posting to the Community concerning dealing with bank transactions in QuickBooks Online (QBO), chorna.

For business, it's advisable to separate personal spending from business spending. To correct your credit card balance, it's best to record all of your business transactions on your credit card statement. This does not limit all of your business and personal expenses paid with the credit card.

With that, you can refer to this article to assist your client in recording a personal expense from a business account and reimbursing the company: Pay for personal expenses from a business credit card or bank account in QuickBooks Online.

It's also good practice to keep their personal and business transactions separate for easier reconciliation, accurate financial reporting, and potential tax advantages.

Also, it's recommended to regularly reconcile their credit card statements against the transactions recorded in your accounting system to help them identify any discrepancies early on and ensure that all business expenses are accounted for correctly.

The Community is always open if you require additional help with recording transactions for your businesses. Take care!

Rainflurry · ‎September 19, 2024

@chornaday

"The issue is the credit card balance is incorrect on the balance sheet."

Hopefully, this is a sole proprietorship. You didn't mention if the business is paying the cc balance for both the personal and business expenses or if the business is paying the business expenses and your client is making a separate payment for the personal expenses. Presumably, the business is paying both since you're asking this question. Ideally, the business would pay just the cc balance that consists of business expenses and your client would make a separate payment from their personal account for the personal expenses. But, if the business is paying the full balance that consists of both business and personal expenses (bad idea), assign the portion of the payment that consists of the business expenses to the cc liability account and the portion of the payment that consists of personal expenses to your client's equity account. The cc liability balance should only consist of business expenses.

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