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C_Heath-Veik
Level 3

Personal payment should have been business payment

As a self-employed business owner (my wife and I run the business as a 50/50 partnership), I was paying for our health insurance from our personal bank account for the first 4 months of 2024. My tax preparer told me in April that I need to pay it through our business in order to avoid paying a penalty. I need to know how to make the entry for the months of January through April to show that I paid through the business, even though I paid with my personal account. Do I need to create a journal entry for those months? What account should that money come from? Owners draw? Or do I need to create a payment to the business checking account from a personal check? I have already reconciled the account for the year. I need specific instructions, not a link to a QuickBooks article please. Thank you. 

Solved
Best answer January 05, 2025

Best Answers
Rainflurry
Level 14

Personal payment should have been business payment

@C_Heath-Veik 

 

The best way to record this is to create four separate Expense transactions (New > Expense), one for each of Jan. - Apr.  On each expense transaction, enter the health insurance provider as the Payee, enter a line item for the monthly health insurance cost as a positive amount, and enter a second line item as Partner Draw as a negative amount so the transaction nets to $0.  If you keep separate partner draw equity accounts, add separate line items for you and your wife's portion of the expense.  If you don't keep separate partner equity account, just enter it as one line item as previously mentioned.  That will increase the partnership health insurance expense as well as your partner equity account(s) for the amount of the health insurance paid personally.  There's no need to transfer cash into the business.    

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2 Comments 2
MarkAngeloG
QuickBooks Team

Personal payment should have been business payment

Hi there, @C_Heath-Veik.

 

Thanks for reaching out to the QuickBooks Community. Since you paid for business health insurance with personal funds, you'll need to record this in QuickBooks to accurately reflect your business finances. I'm here to guide you in getting the best help available.

 

To ensure you record this correctly, I strongly recommend consulting with your accountant or a qualified bookkeeper. They can advise you on the specific journal entries and accounting methods that are most suitable for your business and in compliance with all applicable tax regulations.

 

They can also guide you on how to handle this situation within QuickBooks, considering your specific accounting setup and the impact on your financial statements.

 

We can also help you look for professional accountants through this page: Find an Accountant Near You.

 

If you’re looking for additional guidance on managing your books or making entries like these, check out our QuickBooks Live Expert Assisted program. Our team of experienced professionals can provide hands-on help, answer your questions in real time, and share their best practices to make sure everything is set up accurately.

 

Let us know if you have additional concerns besides recording business expense in QuickBooks Online. We're always here to assist you.

Rainflurry
Level 14

Personal payment should have been business payment

@C_Heath-Veik 

 

The best way to record this is to create four separate Expense transactions (New > Expense), one for each of Jan. - Apr.  On each expense transaction, enter the health insurance provider as the Payee, enter a line item for the monthly health insurance cost as a positive amount, and enter a second line item as Partner Draw as a negative amount so the transaction nets to $0.  If you keep separate partner draw equity accounts, add separate line items for you and your wife's portion of the expense.  If you don't keep separate partner equity account, just enter it as one line item as previously mentioned.  That will increase the partnership health insurance expense as well as your partner equity account(s) for the amount of the health insurance paid personally.  There's no need to transfer cash into the business.    

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