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assawagafarm
Level 2

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!

Solved
Best answer December 10, 2018

Best Answers
qbteachmt
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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7 Comments 7
qbteachmt
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.

assawagafarm
Level 2

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?

assawagafarm
Level 2

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?

qbteachmt
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.

assawagafarm
Level 2

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!

pdp1947
Level 1

How to reimburse the business for an accidental personal expense

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

DebSheenD
QuickBooks Team

How to reimburse the business for an accidental personal expense

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!

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