reimbursement between 2 companies

Gracymedina80 · ‎February 04, 2022

Good morning,

I have this situation, I'm not accountant or bookkeeper but I help them with their QB.

company A pays for some materials, labor and some company B 's credit card debts corresponding with expenses for company B owner's house. Important information is that Company A and B works together and split earnings. So this is like A is helping B and B will reimburse everything back as soon as possible.

How can I enter all these expenses in A QB desktop and the payment back when received?

If I entered them as invoices then the payment received would be income to company A .

Help is really appreciated, thank you in advance.

Pete_Mc · ‎February 04, 2022

Thanks for the reply. I've got a better picture now.

So All of the payments A made for B can go into the Other Current Asset Acct (the Loan to B). It doesn't matter if it was the money given to B that they used to pay bills or the bills A paid directly for B. All of the money B needs to repay A can all go into that Other Current Asset Acct.

On B's side.... They can make payments to A that pay down the Loan and they would be associated with the Liability Acct (Loan). But other payments to A to repay for the Contractor or the materials A paid for can be assigned to the appropriate Expense Acct.

B pays A $50 toward Loan.... In Checking the Name is "A" the Account = A Loan (Long Term Liability)

B repays A $25 for materials.... In Checking the name is "A" the Account = Building Materials (Expense) or whatever it is called in the Chart of accounts.

Now if it's going to take B a long time to repay for the Expenses (materials, etc.) then it should all be included in the Loan. But if it's just a matter of paying back the Credit Card expenses, you should just be able to handle it as an outstanding bill. A could even send B an Invoice to keep track of these items.

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Pete_Mc · ‎February 04, 2022

If I'm following you correctly...

A gave money to B.... A loan

B will pay the "loan" back

B also paid personal expense for the owner

So A sets up a Asset Account called something like "Loan to Company B" The Check/Transfer in the Bank Account should go to this Acct.

Then B sets up a Liability Account called something like "Loan from Company A" The can be a Short Term Liability Acct if you think it will be paid back in 2022, otherwise the standard for a loan is a Long Term Liability Acct. I'm assuming they are the same owner, so you're not going to be paying interest and therefore no need for an Interest Expense Acct (which you would set up if it was a Bank Loan, etc.)

The Deposit into B's Bank Account should be associated with this Acct. As you make Payments back to A, you would again use this as the Acct and the Balance will come down.

For the Personal Expenses of the Owner house would go to the Owners Equity Account. And I'm assuming they are "expenses".... But if you mean Company B BOUGHT a house for the Owner, then don't listen to anything any of us here tell you. The owner needs to get in touch with their Tax Accountant and make sure all this money going between companies is done exactly the way they want to show the transfers.

Gracymedina80 · ‎February 04, 2022

Thank you for your quick response ! I think I understood Maybe i didn't explain very well due my English

Company A and Company B are not the same owner but they works together and no, B will not be paying interest at all to A.

The first part I think I understood. A Asset account could be "other current asset" ( includes loan from your business) ? I will let you know if I made it after trying on QB.

This part : "B also paid personal expense for the owner" I don't get it.

some credit card debts from B were paid by A but are expenses like materials and telephone etc not a house jeje I wish.

The point is that A paid some due payments of B's company credit card and appears in A 's bank statements as withdrawals.

A paid with his company payroll some hours of labor that worked in remodeling B 's house, that originally were assigned to B( clicked billable) as customer to bill after but them would no be a reimbursement but Income.

A also paid with A 's company credit card some subcontractors and some materials that were used in B's house. All these also were assigned to B as customer but if A send invoice to B then is not a reimbursement but income.

sorry the long text

and really thank you very much for your help!

Pete_Mc · ‎February 04, 2022

Thanks for the reply. I've got a better picture now.

So All of the payments A made for B can go into the Other Current Asset Acct (the Loan to B). It doesn't matter if it was the money given to B that they used to pay bills or the bills A paid directly for B. All of the money B needs to repay A can all go into that Other Current Asset Acct.

On B's side.... They can make payments to A that pay down the Loan and they would be associated with the Liability Acct (Loan). But other payments to A to repay for the Contractor or the materials A paid for can be assigned to the appropriate Expense Acct.

B pays A $50 toward Loan.... In Checking the Name is "A" the Account = A Loan (Long Term Liability)

B repays A $25 for materials.... In Checking the name is "A" the Account = Building Materials (Expense) or whatever it is called in the Chart of accounts.

Now if it's going to take B a long time to repay for the Expenses (materials, etc.) then it should all be included in the Loan. But if it's just a matter of paying back the Credit Card expenses, you should just be able to handle it as an outstanding bill. A could even send B an Invoice to keep track of these items.

Gracymedina80 · ‎February 04, 2022

thanks Pete!

In fact i was doing it, i Have all the expenses as invoices to keep the tracking updated in A QB but i was told that then when i received the payment, would be an income and then A must pay taxes for that. so i didn't know how is better.

thank you so much for your replies and time! really appreciated.

Pete_Mc · ‎February 04, 2022

If you make everything a Loan, then B is just paying back A.

HOWEVER, I would still run this by your Tax Accountant. There's a good chance they may want to make some recommendations.

Gracymedina80 · ‎February 08, 2022

yes I will! thank you again.

fragaj40 · ‎January 25, 2023

Hello can I do the reimbursement instead of using an asset account use a liability account cause actually is a liability to the company that would need to reimburse the other company .

for example I have a company a that paid expenses within company a for company b . So those expenses actually belong to company b how do you go about this scenario ? Do we use a journal entry to do the transactions .what would be the debit and the credit for this reimbursement to the other company b ???

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reimbursement between 2 companies