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nyspotlessllc
Level 1

How do i record my expense of owne'r pay and personal expense - when i pay myself... how do you record that under expenses..as i'm not a vendor/customer...

 
4 Comments 4
Rustler
Level 15

How do i record my expense of owne'r pay and personal expense - when i pay myself... how do you record that under expenses..as i'm not a vendor/customer...

If you file taxes as a sole proprietor or a partnership, then your pay is an equity draw

If you take funds for a personal expense that is also an equity draw

 

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

ReymondO
QuickBooks Team

How do i record my expense of owne'r pay and personal expense - when i pay myself... how do you record that under expenses..as i'm not a vendor/customer...

Hey there, @nyspotlessllc.

 

I'll share with you the steps on how to handle a personal expense in a business account in QuickBooks Online (QBO).

 

When you use a business account to pay for a personal expense, you can record it in QuickBooks. After that, you can reimburse the company. 

 

Here's how:

 

Step 1: Record a personal expense from a business account

  1. Click + New and select Expense.
  2. Choose a Payee from the drop-down menu and select the Bank AccountCash Account, or Credit Card you used to make the purchase.
  3. In the Category details section, select the drop-down list to select the tax category that fits your need.
  4. Enter the Amount of the purchase.
  5. Select Save and close.

expenses.PNG

Step 2: Reimburse the company

  1. Click the + New icon and select Bank Deposit.
  2. Choose the Account to add the reimbursement to, and select the Date.
  3. Go to the Add funds to this deposit section. In the Received From field, enter the person who made the personal expense, then select the account. 
  4. Select the Payment Method and enter the reimbursement amount.
  5. Click Save and close.

 

Please take note that it's not advisable to mix personal and business funds. It is much easier to keep track of business expenses for tax purposes if you use a separate business account instead.


For more info, please check out this article: Mixing business and personal funds.

 

Let me know if you need further assistance with this. I'm always around to provide answers and clarifications to your questions. Have a great day ahead and take care.

nyspotlessllc
Level 1

How do i record my expense of owne'r pay and personal expense - when i pay myself... how do you record that under expenses..as i'm not a vendor/customer...

i'm asking as an LLC sole proprietor - as i file the business taxes on my 1040. so i want to take money as the owner ... i'm not planning to reimburse the company as you described. its owner's pay...am i missing something here? is it clear?

 

KlentB
QuickBooks Team

How do i record my expense of owne'r pay and personal expense - when i pay myself... how do you record that under expenses..as i'm not a vendor/customer...

Thank you for clarifying, nyspotlessllc.

 

If you're a sole proprietor and want to get paid as the owner, you'll have to set up an owner's draw account. I'll guide you in doing this process:
 

  1. Select Accounting from the sidebar menu, go to Chart of Accounts.
  2. Click New to create a new account.
  3. From the Account Type drop-down menu, choose Equity.
  4. From the Detail Type drop-down menu, choose Owner’s Equity.
  5. Enter an opening balance.
  6. Click Save and Close.

To get paid, you'll just have to write a check from the owner's draw account. Here's how:
 

  1. Click the + New button.
  2. Select Check.
  3. Choose the bank account where your money will be withdrawn.
  4. Fill in the necessary fields.
  5. In the Account field, be sure to select the Owner's equity account you created.
  6. Select Save and Close.

To learn more about this process, you can read this article: Set up and pay an owner's draw. With QuickBooks Online, you can set up owners or partners to track what they contribute to your business.

 

If I can be of any additional assistance, please don't hesitate to leave a comment below. I'll always have your back.

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