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Angie13
Level 2

Expenses

I am looking for a solution to a problem. I have company expenses that were paid by the owners personal funds. How do I record these expenses without actually paying them out of the checking account?

2 Comments 2
BigRedConsulting
Community Champion

Expenses

In this case you can record them in the Owner's Equity account register, as in increase to the account, which will increase expenses on the P&L.

RaymondJayO
Moderator

Expenses

I've got the solution you need, @Angie13

 

First, let's create a journal entry to record the company expenses that your owners paid with their funds.

 

Before that, set up these two accounts below: 

  • Expense account for the costs
  • Clearing account to reimburse the personal funds (since you don't want to pay them out of the checking account)

 

I'd suggest consulting your accountant to determine the appropriate types for these two accounts. They can also help you assist when creating the journal entry.

 

Once done, proceed with the steps below. 

  1. Go to the Company menu and select Make General Journal Entries.
  2. Set the Date
  3. Choose the expense account you've created for the costs on the first line. 
  4. In the Debit column, enter the amount. 
  5. Select Partner's equity or Owner's equity on the second line. 
  6. In the Credit column, enter the same amount. 
  7. Click Save & Close.

 

The screenshot below shows you the last six steps. Repeat the process above for the other owners. 

RecordJEForCompanyExpensesInQBDT.PNG

 

Second, let's record the reimbursement through a check. Make sure to use the clearing account you've created above in the Bank Account drop-down list.

 

Also, it's a great business practice to avoid mixing company and personal expenses. But there may be times where it's necessary. Thus, I recommend visiting this link for more information: General Overview

 

I'll lend a helping hand if you have other concerns. Wishing you and your business continued success while using the program. 

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