cancel
Showing results for 
Search instead for 
Did you mean: 
Senior Explorer **

Chart of Accounts/Vendors

Ok, Kinda stuck here. Our company is an LLC with one owner. The owner is also a vendor as he will issue the company an invoice for supplies. My question is, how do I label all the different transactions? 

1. Owner will pay for supplies with his own card/cash, then transfer from company checking to personal account then when it updates in In QB he will label it  as reimbursement under loan from member and himself as the payee?  Is this correct? 

2. When he invoices the company for supplies, he is the payee again. 

 

So when I click on his name under the Vendor section all his reimbursements and invoices (as Vendor) are in this section, is this correct? Should the company he bought the supplies from be the "payee". for example he will buy a ladder from Home Depot with his personal debit card. Then he will transfer the amount for the ladder form the company account to his personal account to reimburse him and mark himself as the payee. 

 

Does he have the labeling correct? Please forgive me if I did not explain this correctly.

Solved
Best answer 10-09-2018

Accepted Solutions
Established Community Backer ***

Re: Chart of Accounts/Vendors


@NU-LTGx wrote:

Ok, Kinda stuck here. Our company is an LLC with one owner. The owner is also a vendor as he will issue the company an invoice for supplies. My question is, how do I label all the different transactions? 

1. Owner will pay for supplies with his own card/cash, then transfer from company checking to personal account then when it updates in In QB he will label it  as reimbursement under loan from member and himself as the payee?  Is this correct? 

 

No, as a single owner he can not loan to or borrow from himself.

Money he takes out of the business is an equity draw

 

2. When he invoices the company for supplies, he is the payee again. 

 

So when I click on his name under the Vendor section all his reimbursements and invoices (as Vendor) are in this section, is this correct? Should the company he bought the supplies from be the "payee". for example he will buy a ladder from Home Depot with his personal debit card. Then he will transfer the amount for the ladder form the company account to his personal account to reimburse him and mark himself as the payee. 

 

He is a vendor, and he should be tracked as a 1099 vendor.

It is not reimbursement, the company is buying from him.  You enter his bill and pay it using the appropriate expense or asset account for the purchase.

 

at the end of the year he gets a 1099 for those purchases.  This is an outside business for him and it must be kept separate.

 

As you can see the previous copy and paste answer in not applicable.


 

View solution in original post

6 Comments
Moderator

Re: Chart of Accounts/Vendors

Thanks for those details, @NU-LTGx.


I'm here to share the recommended steps in recording business expenses paid by personal funds.


First, you'll have to create an Owner’s Equity account. Then, record the owner's reimbursement by using a check or an expense.


It’s important to follow the steps below so your accounts remain accurate.


Here's how:


To create an Owner’s Contributions equity account:

  1. Select Accounting on the left pane, then choose Chart of Accounts.
  2. Click the New button on the left.
  3. Choose Equity under the Account Type and Owner's Equity under the Detail Type.
  4. Click the Save and close button.

To record the reimbursement using a check:

  1. Click the Plus sign icon at the top, then choose Check.
  2. Select the owner’s name in the Choose a Payee field.
  3. Choose the Bank Account you are reimbursing from.
  4. Under Account, select Owner's Equity.
  5. Enter the amount to reimburse yourself.
  6. Select Save and new or Save and close.

To record the reimbursement using an expense:

  1. Click the Plus sign icon at the top, then choose Expense.
  2. Select the owner’s name in the Choose a Payee field.
  3. Choose the Bank Account you reimburse from.
  4. Click the correct Payment Method.
  5. Select the Owner's equity under Account.
  6. Enter the amount to reimburse yourself.
  7. Click Save or Save and close.

Here are relevant articles that may come handy:

That should do it! The steps above will help you record the transactions properly. I'd be more than happy to assist if you have more questions. Have a good day.

Highlighted
Senior Explorer **

Re: Chart of Accounts/Vendors

Thank you so much for all the help! When you say to add name to the payee..which should he be under Vendor or Employee? Even though he is the owner. And since it's an LLC does it still go under equity or would it be a liability? 

Established Community Backer ***

Re: Chart of Accounts/Vendors


@NU-LTGx wrote:

Ok, Kinda stuck here. Our company is an LLC with one owner. The owner is also a vendor as he will issue the company an invoice for supplies. My question is, how do I label all the different transactions? 

1. Owner will pay for supplies with his own card/cash, then transfer from company checking to personal account then when it updates in In QB he will label it  as reimbursement under loan from member and himself as the payee?  Is this correct? 

 

No, as a single owner he can not loan to or borrow from himself.

Money he takes out of the business is an equity draw

 

2. When he invoices the company for supplies, he is the payee again. 

 

So when I click on his name under the Vendor section all his reimbursements and invoices (as Vendor) are in this section, is this correct? Should the company he bought the supplies from be the "payee". for example he will buy a ladder from Home Depot with his personal debit card. Then he will transfer the amount for the ladder form the company account to his personal account to reimburse him and mark himself as the payee. 

 

He is a vendor, and he should be tracked as a 1099 vendor.

It is not reimbursement, the company is buying from him.  You enter his bill and pay it using the appropriate expense or asset account for the purchase.

 

at the end of the year he gets a 1099 for those purchases.  This is an outside business for him and it must be kept separate.

 

As you can see the previous copy and paste answer in not applicable.


 

View solution in original post

Senior Explorer **

Re: Chart of Accounts/Vendors

Thank you Rustler!

Established Community Backer ***

Re: Chart of Accounts/Vendors

You're Welcome

Not applicable

Re: Chart of Accounts/Vendors


I would prefer handling the transaction entirely different.

A. An owner status has no significance in this situation. He is acting as an employee conducting normal business.

B. Set up reimburse employee for expenses and he must submit receipts incurred for supplies. So you track items purchased as cash receipts and the vendor is lowe’s or where he bought it from and the company maintains rights for warranty or exchanges. 

C. Your company policy should state authorization for procurement/purchases and reimbursement procedures. 

Need to get in touch?

Contact us