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Ellie Meyer
Level 1

Reimbursing Start-up Cost

I recently started a LLC with 2 other people. We paid for the start up costs (website, insurance, licensing) out of our personal accounts. I was wanting to reimburse all the owners for the money that they spent out of their own pockets, but I was also wanting to document the expenses for tax purposes. How would I go about entering the expenses and entering the reimbursement payments to the owners?

Solved
Best answer May 12, 2020

Best Answers
RaymondJayO
Moderator

Reimbursing Start-up Cost

Welcome to the Community, @Ellie Meyer. I'm here to guide you through entering the expenses and reimbursements to your LLC's owners in QuickBooks Online (QBO). 

 

First, let's create a journal entry to record the expenses you've paid for the start-up costs out of your own pockets.

 

Before that, you'll have to set up an expense account for the costs. Also, add a bank account to use to reimburse the personal funds. 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. Please make sure to switch from a Business view to an Accountant view. Once verified, proceed with the steps below. 

  1. Go to the + New button from the left menu. 
  2. Select Journal entry under Other
  3. Set the Journal date
  4. Choose the expense account you've created for the costs on the first line. 
  5. In the Debits column, enter the amount. 
  6. Select Partner's equity or Owner's equity on the second line. 
  7. In the Credits column, enter the same amount. 
  8. Hit Save.

 

The screenshot below shows you the last six steps. Just repeat the process above for the other two owners. 

JEToRecordBusinessExpensePaidOutOfPersonalFunds.PNG

 

Second, let's record the reimbursement through a check or an expense. Please make sure to use the bank account you've created to reimburse the personal funds. Then, repeat the process for the other two owners. For the detailed instructions, see Step 2 through this article: Pay for Business Expenses with Personal Funds

 

Once done, you'll be able to pay and file the correct taxes to the appropriate agencies. For more information, visit this article: Tax Basics For Limited Liability Companies (LLCs).

 

Furthermore, it's a great business practice to avoid mixing business and personal expenses. But there may be times where it's necessary. With this, I recommend visiting this article for more details: Mixing Business and Personal Funds Overview. Also, click the two links to help you pay for personal expenses from a business account and reimburse an employee. 

 

Please know that I'm here anytime you have other concerns. Wishing you and your business continued success while using QBO, @Ellie Meyer

View solution in original post

3 Comments 3
RaymondJayO
Moderator

Reimbursing Start-up Cost

Welcome to the Community, @Ellie Meyer. I'm here to guide you through entering the expenses and reimbursements to your LLC's owners in QuickBooks Online (QBO). 

 

First, let's create a journal entry to record the expenses you've paid for the start-up costs out of your own pockets.

 

Before that, you'll have to set up an expense account for the costs. Also, add a bank account to use to reimburse the personal funds. 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. Please make sure to switch from a Business view to an Accountant view. Once verified, proceed with the steps below. 

  1. Go to the + New button from the left menu. 
  2. Select Journal entry under Other
  3. Set the Journal date
  4. Choose the expense account you've created for the costs on the first line. 
  5. In the Debits column, enter the amount. 
  6. Select Partner's equity or Owner's equity on the second line. 
  7. In the Credits column, enter the same amount. 
  8. Hit Save.

 

The screenshot below shows you the last six steps. Just repeat the process above for the other two owners. 

JEToRecordBusinessExpensePaidOutOfPersonalFunds.PNG

 

Second, let's record the reimbursement through a check or an expense. Please make sure to use the bank account you've created to reimburse the personal funds. Then, repeat the process for the other two owners. For the detailed instructions, see Step 2 through this article: Pay for Business Expenses with Personal Funds

 

Once done, you'll be able to pay and file the correct taxes to the appropriate agencies. For more information, visit this article: Tax Basics For Limited Liability Companies (LLCs).

 

Furthermore, it's a great business practice to avoid mixing business and personal expenses. But there may be times where it's necessary. With this, I recommend visiting this article for more details: Mixing Business and Personal Funds Overview. Also, click the two links to help you pay for personal expenses from a business account and reimburse an employee. 

 

Please know that I'm here anytime you have other concerns. Wishing you and your business continued success while using QBO, @Ellie Meyer

View solution in original post

JRCook1
Level 1

Reimbursing Start-up Cost

I have a question about this. Do you then enter the transactions as expenses on the business side? Or is that considered entering the expenses? 

Mark_R
QuickBooks Team

Reimbursing Start-up Cost

Thank you for joining the thread, @JRCook1.

 

Yes, you'll have to enter expense transactions for the business side. However, I still recommend seeking help from your accountant for more guidance on recording this. If you don't have an accountant, you can find one through this link.

 

You might also want to learn more about mixing business and personal expenditures. This will help you record expenses that are paid using your personal account.

 

Please know that I'm just a reply away if you need any further assistance recording reimbursement. Have a good one.

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