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kassyclean
Level 1

Should I link my personal accounts to account for business expenses I've paid out of my own pocket?

I am a sole proprietor llc and starting my business from the ground up. I've had to pay for business expenses out of my personal account. Should link my personal accounts to match the receipts I've been keeping to show expenses instead of only profit?

3 Comments 3
BabyB
QuickBooks Team

Should I link my personal accounts to account for business expenses I've paid out of my own pocket?

You no longer need to link your personal account to QuickBooks, as it will mix your business and personal expenses, Kassy.

 

You can create a journal entry (JE) to record business expenses paid with personal funds. Here's how:

 

  1. Select + New.
  2. Select Journal entry.
  3. On the first line, select the expense account for the purchase.
  4. Enter the purchase amount in the Debits column.
  5. On the second line, select Owner's equity.
  6. Enter the same purchase amount in the Credits column.
  7. Select Save and close.


je (1).png

After that, record the reimbursement through check or expense. This way, the transaction will show as business expenses in your financial reports.

 

I recommend consulting with your accountant to ensure accurate recording of your accounts.

 

Moreover, reconciling your accounts is essential to maintain accurate financial records.

 

Explore our QuickBooks Live Expert Assisted team of experts who can offer the best bookkeeping practices to enhance your efficiency in completing business tasks in QuickBooks Online (QBO).

 

Let us know if you need further assistance with your business expenses in QBO. We're dedicated to addressing them promptly.

FishingForAnswers
Level 10

Should I link my personal accounts to account for business expenses I've paid out of my own pocket?

@kassyclean  "Should link my personal accounts to match the receipts I've been keeping to show expenses instead of only profit?"

 

No.

 

As a rule, personal bank accounts have no place on business books.

 

What you can do to account for what you've already done is create an Expense transaction and, in the detail section, set the relevant expenses against a negative line for some manner of Owner's Equity.

 

This will create a $0.00 net transaction that recognizes the relevant expenses while increasing Owner's Equity (the amount of money the owner has invested in the business).

 

Going forward, best practices would be to simply move money over from your personal account to your business account as necessary and make the actual purchase from your business account.

 

While the suggestion from @BabyB  would also work, it is generally not a good idea to use Journal Entries in QB unless you absolutely have to; they do not play well with the way QB sources reports.

SIAB
Level 7

Should I link my personal accounts to account for business expenses I've paid out of my own pocket?

@kassyclean 

You shouldn't connect your personal bank account. I would recommend to use Melio to sync with your QBO account and reimburse your expenses from your business bank account with it.

https://quickbooks.intuit.com/learn-support/global/manage-suppliers-and-expenses/pay-bills-online/01...

 

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