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Level 1

How to reimburse the business for an accidental personal expense

I accidentally used my business card to pay for a personal bill. I previously entered the reimbursement under a bank deposit from my Owner Equity account to reimburse the business but I don't want this transaction to be a capital contribution. Or is this how it's done? And from the "Received From" column, do I put "Owner (vendor)"? I'm confused...

 

Thank you in advance!

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Best answer 12-10-2018

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Level 15

How to reimburse the business for an accidental personal expense

"Our" business being an LLC means you have Partners? In that case, the initial spending entry is posted not as expense, but as Owed From Others (an Other Current Asset account) and you repay them and this is deposited as Other Current Asset = loan repayment.

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Level 15

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.

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Level 1

How to reimburse the business for an accidental personal expense

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

Highlighted
Level 1

How to reimburse the business for an accidental personal expense

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

Highlighted
Level 15

How to reimburse the business for an accidental personal expense

"Our" business being an LLC means you have Partners? In that case, the initial spending entry is posted not as expense, but as Owed From Others (an Other Current Asset account) and you repay them and this is deposited as Other Current Asset = loan repayment.

View solution in original post

Highlighted
Level 1

How to reimburse the business for an accidental personal expense

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

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