cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

How an LLC pays back a portion of the utility bill to its owner

Hi, I've read a bunch of other topics similar to this and I am still confused about it.

 

I have the owner (myself) pay the total utility bill each month but a portion of it is used by the business (an LLC). I'd like to pay back the owner. Can this be as easy as entering bills for each monthly bill and then paying the Owner (registered as a vendor)?

 

I see many tutorials where Owner Equity is used whereby the bill is expensed and the same amount is entered as owner contribution from the Owner Equity account which cancels out the two entries. In this scenario, there is no need to make any transactions in the bank account (i.e. the whole transaction is just contained in QB??)?

 

It may be a silly question but I appreciate your help in advance.

3 Comments
Highlighted
QuickBooks Team

How an LLC pays back a portion of the utility bill to its owner

Hello there, assawagafarm!

 

There's nothing silly about your question! Managing business finances has a lot of different areas we need to consider, and I'm happy to lend a hand. 

To record a business expense paid by personal funds, you first enter the payment made as a journal entry. Then, post the reimbursement through a check.  

 

Please note that you would need a bank account or a petty cash account when returning the portion of the utility bill payment to yourself. This is where you'll get the money to reimburse from. 

 

To create a Journal Entry:

  1. Go to Company, then select Make Journal Entries.
  2. Enter the correct date and entry number. 
  3. From the first line, specify the appropriate Expense Account for the utility bill.
  4. Enter the amount of the purchase in the Debit column.
  5. On the second line, in the Account column, enter the Owner's equity.
  6. In the Credit column, enter the utility payment amount.
  7. (Optional) In the Memo field, add Reimbursable to help you identify the transaction later.
  8. Select Save.

Record the reimbursement as a check:

  1. Choose Banking at the top menu bar, then Write Checks.
  2. Pick the Bank Account you want to get the money from.
  3. Since you've set up your name as a vendor, select it from the Pay to the order field. 
  4. In the Account column, choose Owner's Equity.
  5. Enter the Amount of the reimbursement.
  6. Select Save.

That should do it! With these steps, you should now be able to record the payment to yourself and get back to business. 

 

Feel free to follow up with me here for all of your QuickBooks needs, I value your time and business with us. Thanks for dropping in and keep safe.

Highlighted
Level 1

How an LLC pays back a portion of the utility bill to its owner

Hi Vivien,

 

Thank you so much for your thorough answer! Just a few more questions though...

 

Do I need to use Owner's Equity?

 

Is it possible to just "Write Checks" and pay to the order of "Owner (the vendor)" and enter "Utilities:Electricity" expense account in the first column Account?

 

Thank you again!

Highlighted
Level 10

How an LLC pays back a portion of the utility bill to its owner


@assawagafarm wrote:

 


I have the owner (myself) pay the total utility bill each month but a portion of it is used by the business (an LLC). I'd like to pay back the owner. Can this be as easy as entering bills for each monthly bill and then paying the Owner (registered as a vendor)?

 


If the LLC is not a corporation or partnership then the LLC and it's member are the same legal entity, so there really is no need for the LLC to pay you because you are paying yourself.  It is just a movement of money between your own bank accounts (although the personal account is protected if you are sued and the business account is not, I believe).  A payment of a business expense from the personal account could be recorded as an Expense transaction (not a Bill transaction - that raises AP, to you as the vendor, which is not right) using a bank type clearing account called "Expenses paid with personal account" or similar (it would be useful if you could create an Expense transaction directly from Equity, but it won't let you) .  At year-end, transfer the balance to Equity.   Any transfer of money between personal and business bank account would be recorded to Equity. 

Need to get in touch?

Contact us