How to record business expense paid by shareholder's own fund?

joycesyi · ‎January 16, 2020

Hello, I'm the sole shareholder of a corporation, taxed as S corp. In the year 2019, I paid a total of $8,500 business expenses out of my own pocket. But I don't want to reimburse myself anytime sooner. For tax filing purposes, should I create a "shareholder's loan" or "shareholder's line of credit" type of current liability account? What is the best name and bookkeeping method to handle corporate expenses paid by shareholders? Are there any dollar amount restrictions or payback date restrictions of this type of account? Thank you.

Rustler · ‎January 17, 2020

In double entry accounting which is what QB is, you have to (in any corporation) loan the money to the company before you can enter the expense.

set up a liability account due to [name]

use a zero dollar expense
line one the expense account and the amount

line two the liability account and the same amount as a negative number

save

You have pay the liability back, as far as I know there is no real time limit. You can pay off the liability from distributions if you want after your shareholder meeting that approves the distirbution.

View solution in original post

Rustler · ‎January 17, 2020

In double entry accounting which is what QB is, you have to (in any corporation) loan the money to the company before you can enter the expense.

set up a liability account due to [name]

use a zero dollar expense
line one the expense account and the amount

line two the liability account and the same amount as a negative number

save

You have pay the liability back, as far as I know there is no real time limit. You can pay off the liability from distributions if you want after your shareholder meeting that approves the distirbution.

Sonar · ‎May 04, 2021

Please make it clear. You commented to all posts related to "Due to Shareholder" account usage but it's not clear what you meant. Thank you!

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How to record business expense paid by shareholder's own fund?