Company A paying bills/expenses for Company B (Which is a new Start Up)

RMEDistribution · ‎April 04, 2021

Company B is a Cannabis company, so not legal to use a bank or credit/debit cards, or I would just loan the funds to Company B, and they could pay the bills out of a bank account.

Once Company B has cash flow, we can start making cash payments and money orders for expenses.

But in the beginning, we had to purchase equipment from out of state suppliers, which was easier to do using a business debit card for Company A.

I understand how to set up an asset account for Company A, create a service item for the service being paid and select that due from account on the item screen. Then enter the bill and use that item in item details, or use that account in the account details, and enter the amount, pay the bill. The due from account total will increase with each payment. Then invoice Company B and use that item on the invoice, when the payment is made the due from account balance will decrease.

My question is how to run the transactions on Company B QBO. I know I can create a loan, but I want to have each bill being paid by Company A in the appropriate Company B expense account.

TIA

john-pero · ‎April 05, 2021

"illegal" depends on where you are and what type of plant you are growing and for what purpose. In my state we have locally grown-produced CBD (non-hallucinogenic by law and test) outfits using a local bank with no trouble. If the pot you plan to sell is legal to raise where you raise it and legal to sell where you sell it then you should be able to find a local or regional bank willing to do business. And cash can always be turned into plastic, $9,999 at a time (lol)

Money laundering aside, you are recording the expenses in the wrong account. These are not otherwise valid expenses to Company A and simply being billed or passed through to B. Start with the expenses in Company B, and the source of the funds are loans from Company A. Or they could be equity infusion into Company B if A owns B (or if you own both). If you own Company B then any money you place at the disposal of Company B 9or spend on its behalf) is Owner Contribution

kgResortWear · ‎August 29, 2021

Open a monthly Purchase Order from company B (the start-up) issued to Company A (the funding source).

On the PO, add the detail of each expense incurred (which needs to be paid back). This will total under the Vendor balance due to Company A.

If company B is placing orders for stuff, it can generate POs or use the company A credit card to charge the expense. It both cases, it's "play money" on Company B's balance sheet. That balance needs to make its way onto the Company A monthly PO. Use a journal entry to off-set the "paid" vendors and and put the amount into a liability account (due to Company A)

At the end of the period, this gets "washed" with the Company A PO accumulated balance.

All the best,

Kevin

SRogers69 · ‎January 12, 2022

How would you set up Company B account in Company A books? As an other current asset? Like when you transfer money for expenses from A to B. My books look so wierd as it is now. I usually just do a transfer from company A to B with B listed as Bank account since it also has its own bank account.

Thanks!

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Company A paying bills/expenses for Company B (Which is a new Start Up)