How to reimburse the business for an accidental personal expense

If you already posted it as Owner Equity Draw, you properly treated it as Personal. There is no need to reimburse a business bank when this is your own business as Sole Proprietorship. You can put money in, any time the business needs funds as part of your Invested Equity, and you take funds any time you want to, as Equity Draw.

Sole Proprietorships don't really have "Capital Contribution" because there is no difference between you and the business in the entity type.

If this is a Corporation, then you never have Equity Draw, and the spending is Shareholder Loan that you need to repay.

See how the tax entity types makes a difference in your rights to use business resources? And of course, it's never a good idea to Mix personal and business, which you did by accident.

Hi, thank you so much for the explanation. Our business is a LLC, does that change any of your answer?

Hi, thank you so much for the explanation. Our business is a LLC, does that change any of your answer?

Thank you that makes a lot of sense. I will basically treat it like a loan then!

How would you fix this error if you are a non-profit?

The steps are basically the same for non-profit companies, pdp1947.

I'll guide you on how to record the accidental personal expense and record reimbursement as well.

First, you can use an Asset account in entering repayments. Here's how to create the account:

1. Go to the Lists menu, then select Chart of Accounts.
2. In the Chart of Accounts, right-click anywhere, then click New.
3. From the Other Account Types drop-down, choose Other Current Asset. Hit Continue.
4. Add an Account Name. You can reference it to the purpose of creating the account like, due from (the person's name).
5. Click Save & Close.
   

Second, write a check that represents the expense transaction. Use the account we created earlier in the expense line item.

Lastly, create a bank deposit to reimburse the organization. Deposit to is the organization's bank, then the From account select the other current asset account.


I'd also recommend consulting an accountant to double-check if there's any specific instructions for non-profit entities like you.

These steps will zero out the balance in your current asset account. Then, your next step is to run the monthly reconciliation. For future reference, read through this article that can help you how to start, review reconciliation: Reconcile an account in QuickBooks Desktop.

Please comment again if you have any other concerns about reimbursements. I'm one post away. Have a good one!