Accidentally paid invoice (that was pass through cost to client) with personal cc months ago, how to adjust?

Sudesi · ‎July 31, 2022

Hello - I'm a single person business owner (S Corp) with a consulting business. I'm reconciling my credit card and bank statements in one big batch today (January-July) and just discovered that back in January, I paid an invoice for outside/third-party services using my personal credit card instead of my business credit card (to the tune of almost $6K). This was an OOP expense that was then passed along to my client as a pass-through cost on their project. I billed the client back in January/February and they have paid in full. So in QB, it looks like that project is closed out and everything is accounted for. But, of course, because I indicated in QB that I had paid for it with a business credit card, I'm now I'm looking at a line item in that account that isn't reconcilable because it wasn't actually paid for out of that account (nor out any of my business accounts). And I'm realizing that I paid off that personal card out of my personal funds, not my business' funds. I'm trying to figure out the best way to adjust this so that a) it doesn't affect the client billing that already took place (i.e., if I just delete/void the credit card charge that I had erroneously designated to my business credit card, it will look like that expense never occurred at all). I also need to pay myself back. I can create a "bill" from myself personally to the business (I'm set up as a "vendor" because I already pay myself rent monthly), and write a memo explaining what it's for, but I don't know if I can go back into the original invoice and replace the credit card expense with that invoice from me. Over the years, I've had small mix-ups where I accidentally used my personal card for small office expenses or accidentally used my business card for a personal expense which have been easy to address, but I've never had one this large or that was tied directly into client billing. Thanks for any help!!

Mich_S · ‎July 31, 2022

I appreciate you for providing further details about your concern with an incorrectly paid invoice, @Sudesi.

I'd like to also share my insights and walk you through the steps to record it properly.

Before anything else, I advise getting in touch with your accountant to know what specific accounts to use or if they know another way to keep track of this transaction.

We can assume that the money is equity or owner's equity money because the personal credit card is not a part of your business. As a result, you can a journal entry of the transaction as a debit to the expense account and a credit to the owner's equity account. You can do that by going to the Company menu and selecting Make General Journal Entries.

See this photo for reference:

You can record a check against your checking account once you pay the credit card company for the business share. You can then use the owner's equity account in the Expenses area.

Go to the Banking menu.
Click on Write Checks.
Fill out all necessary information.
Once completed, click on Save & Close or Save & New.

If the owner is the one receiving the reimbursement, we usually designate the owner as the payee. However, in this instance, the payment is made straight to the credit card company; hence, we have chosen it as the payee.

Once you're ready to match your balances, see this guide for more help: Reconcile an account in QuickBooks Desktop.

Keep in touch if you need more help with this matter or with QuickBooks in general. I'm always willing to assist. Have a great rest start of the week!

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Accidentally paid invoice (that was pass through cost to client) with personal cc months ago, how to adjust?

Accidentally paid invoice (that was pass through cost to client) with personal cc months ago, how to adjust?

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