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MP11
September 28, 2020
Question

Accounting for Owner Expenses

  • September 28, 2020
  • 3 replies
  • 131 views

Hello-

 

The owners has put cash into his business that I put in as owner equity. The owner has expenses that he purchased for the business on using personal cash or credit card. He has other personal expenses through the business that business has paid and has to pay business back. 

 

The expenses he's purchased for the business do I just create bill for the item purchased then make an entry for owners equity. He wants to be reimbursed for these items. I would then right him a check for that amount. 

The personal items he's purchasing am I follow the same process or just creating a journal entry as an owner draw?

I want to ensure I have good understanding how these should be tracked.

 

Thank you

Mariann

 

3 replies

ReyJohn_DModerator
Moderator
September 28, 2020

I've got a couple of steps to ensure you can record business expenses paid with personal funds, @MP11.

 

Generally, it's a good practice to avoid mixing business and personal expenditures. However, there are times when you have to like in your case.

 

First, there's no need to make a personal account in QuickBooks Desktop (QBDT). You'll have to retain the current opening business account you've created.

 

Second, you'll need to create a journal entry to track the business expense you paid with personal funds. Before doing so, I recommend consulting an accountant on what accounts to use to ensure your books are correct. Let me guide you how:

 

  1. Click the Company menu at the top, and then select Make General Journal Entries.
  2. On the first line, choose the expense account for the purchase, and enter its amount in the Debit column.
  3. On the second line, pick the Owner's Equity account, and then enter the same purchase amount in the Credit column.
  4. Hit Save and close.

Third, you can create a check to reimburse the payments from business to personal account. Here's how:

 

  1. From the Banking menu, select Write Checks.
  2. Choose a Bank Account.
  3. Go to the PAY TO THE ORDER OF section and then pick your name.
  4. Tap the Expenses tab, and then choose the owner's equity account and then enter the amount to reimburse in the Amount field.
  5. Click Save & Close.

Also, I'd suggest entering a memo in these transactions, so the other members of your business can easily identify them.

 

You may want to modify and print checks in QBDT. This way, you'll have the info you need and save a copy on hand.

 

Feel free to comment back if you have follow-up questions or any QuickBooks concerns. I'll be here to help. Have a nice day.

MP11Author
September 28, 2020

Thank you for the details - on the owner's expenses.

 

Could help on the second part. He is purchasing items for his personal cars its an auto shop. For those items we paying through the business account. How do I track those expenses he's going to pay the business back?

 

Thank you

RenjolynC
RenjolynC
Level 9
September 28, 2020

Thanks for getting back here, Mariann.

 

I'll share the steps on how you can record a personal expense from a business account. Before doing so, I recommend consulting with your accountant for advice.

 

For tracking the purchased items, you can create a check or expense.

 

Here's how:

 

  1. Go to Banking > Write Checks.
  2. Select the Bank Account, Cash Account, or Credit Card you used to make the purchase.
  3. Choose the vendor's name from the PAY TO THE ORDER OF field.
  4. Click the Expenses tab, and then choose the account category that fits your need.
  5. Enter the Amount of the purchase
  6. Hit Save & Close.

After the steps, you can reimburse the company by recording a bank deposit.

 

Here are the steps:

 

  1. Click Banking located at the top and select Make Deposits.
  2. Select Cancel when you get the Payments to Deposit window.
  3. In the Make Deposits window, select the account you want to put the deposit into from the Deposit to drop-down.
  4. Choose the Date.
  5. In the Received From field, enter the person who made the personal expense, then dd the reimbursement account. Tip: Add the person as a customer if they aren't in your books already. Even if they're not a customer, this is the best option.
  6. Select the Payment Method and enter the reimbursement amount.
  7. Click Save & close.

I'm adding these articles for more details:

 

Please let me know if you need further assistance with other processes in QuickBooks Desktop. I'll be around to help you some more. 

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