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My wife and I started our business backwards by jumping in with both feet. The expenses quickly started to pile up. We were paying from personal accounts and a family member has been contributing license fees. We formed an LLC partnership and opened a business account and Quickbooks today. How do we record those business expenses that we incurred prior to having business accounts and how do we record the capital contributions?
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For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)
[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here
LLC means nothing in terms of accounting, that is only a state registration concerning company liability
There are several ways to do paying with personal funds, I prefer:
1. Create a dummy bank account called owners, use write checks (do not print them, they are just a form for entering transactions) on that account to enter and pay the bills/expenses.
2. When you are finished, the balance will be negative, make a deposit for the total amount and in the account block select owner equity, or better owner equity investment
For a company taxed as a sole proprietor (schedule C) or partnership (form 1065), I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)
[name] Equity (do not post to this account it is a summing account)
>> Equity
>> Equity Drawing - you record value you take from the business here
>> Equity Investment - record value you put into the business here
LLC means nothing in terms of accounting, that is only a state registration concerning company liability
There are several ways to do paying with personal funds, I prefer:
1. Create a dummy bank account called owners, use write checks (do not print them, they are just a form for entering transactions) on that account to enter and pay the bills/expenses.
2. When you are finished, the balance will be negative, make a deposit for the total amount and in the account block select owner equity, or better owner equity investment
are there any videos that walk us through these instructions. I am SO lost. I became a consultant two years ago. The first year, I did nothing accounting-wise. I registered my business name, got an EIN, and that was it. The company I did work for made payments to my personal account, my only account still, in my name. Then last year they made them to my personal account, my only account, but i sent them invoices from my QB self employed, but that is all I did in QB. Well, this year, I started doing business on my own. I got QB Online, and have been trying to set it up, but not very clear on how to do this since I only have one bank account. My company is not profitable yet, i have no credit cards, and can't get any personally. I was sending invoices out and receiving payments via paypal. Then I linked everything up because I know I have got to get this mess cleaned up, and that is where I am. So, what I need to do is. 1. understand what chart of accounts i need as a consultant. I only sell services. 2. I created another bank checking account, it is not a "business account" just anothe checking account. I have them both linked to QBO. Now do I label them? 3. then comes the task of going through all the transactions and moving them to the right bank account and chart of account. Where do I even start and videos would be SO much better if there are any to try and follow. 4. I have a company in Canada that does work for me on some accounts, again, services only. How do I track this? Currently, I send the invoice for the full amount to the client. They pay me. He then sends me an invoice for his 20% of the full amount, and it includes Canada tax even though its services. (that is my next question, how do i track that) then I pay him via PayPal. 5. how do I track his Canadian taxes? I just need help on how to get things cleaned up, separated, and then pay myself as an employee *s-corp, and transfer money to my personal account outside of payroll because right now I need all the money to cover my personal expenses until i land more business. well, not all of it. I do have some business expenses i need to pay with the business account for things like QBO, Email, Website, Etc. and SORRY if this isn't the right place to bring all this up. Please let me know if I need to go about submitting this a different route and I will do that. I am just new to all of this. I apologize
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