How Should I Categorize Deposits From My Personal Bank

Nickerz · ‎February 13, 2025

I have 2 deposit transactions that I transferred from my personal bank account into my business checking account to simply avoid overdrawing my business account at the time. What's the easiest way to either...

1. Take both deposits off my books so they don't affect my business accounting books (i.e., avoid being counted as income or taxed, etc., - one thought was to treat them as loans and then have them paid back???)

2. Keep them on my business books and categorize them so they don't affect things. They are both small amounts and if it's too complicated, I don't need to pay myself back. If this is a simple fix, then I guess I could.

Yesterday, I ended up categorizing both of them in QuickBooks under "Expense" > "Shareholders Distribution - Other" and then I reconciled last month (January). Since I reconciled them already will undoing them throw off January or can I simply change the category they should be under instead of "Expense" > "Shareholders Distribution - Other"?

Thanks in advance!

Rainflurry · ‎February 14, 2025

@Nickerz

These are not considered income or expenses - no worries there. If you intend to pay yourself back, record the deposits as loans. You can change the category on the existing transactions without affecting your January reconciliation. The reimbursement should be assigned to the same loan payable liability account.

If you don't intend to reimburse yourself, assign the proper equity account to the deposits: Additional Paid-In Capital if you're an S-Corp or Owner's Capital/Owner's Equity if you're a sole proprietorship.

View solution in original post

Rainflurry · ‎February 14, 2025

@Nickerz

These are not considered income or expenses - no worries there. If you intend to pay yourself back, record the deposits as loans. You can change the category on the existing transactions without affecting your January reconciliation. The reimbursement should be assigned to the same loan payable liability account.

If you don't intend to reimburse yourself, assign the proper equity account to the deposits: Additional Paid-In Capital if you're an S-Corp or Owner's Capital/Owner's Equity if you're a sole proprietorship.

Nickerz · ‎February 14, 2025

Thanks so much for your help on this! Appreciate it.

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How Should I Categorize Deposits From My Personal Bank