I have a client that has opened a business credit card account and is using it for both business and personal transactions. How do I record this in Quickbooks? I am thinking setting up a liability account to record transactions and apply those charges to the appropriate accounts creating an ongoing liability. The personal transactions I am recording as distributions from equity. He is making payments to the credit card account from his business checking account but so far just the minimum payments.
If I am on the right track on this what happens if anything at the end of the year when there is an outstanding liability on the books? Is my thinking on the right track? Thank you.
All personal charges apply to the owner's equity or equity acct. depending on the business type.
You are on the right track for sure. Reconcile the credit card monthly when the statement comes in. Create the minimum payment once you reconcile. I just click pay bill in full and then change the amount to the amount actually paid.
All personal charges apply to the owner's equity or equity acct. depending on the business type.
You are on the right track for sure. Reconcile the credit card monthly when the statement comes in. Create the minimum payment once you reconcile. I just click pay bill in full and then change the amount to the amount actually paid.
Thanks Lynda. I have set up a credit card account in the Chart of Accounts and will get these transactions in there. It doesn't say what the "credit card account" is but I'm assuming it's a current liability account. Quick question, what's the difference if I do it this way or just set up a current liability account? I'm asking just to learn something.
Question on cash basis vs accrual for credit cards. Company is on the cash basis method. QBO had no credit card liability showing in QBO initially. Admin set up a master credit card account and then sub-accounts under it , as company has several personnel with company credit cards. At month end there is a timing difference as expenses are recorded as charged on the card, but the card isn't paid until mid-month. This results in a credit card "payable" balance at the end of the month. For financial statements, does this "payable" get shown on the financial statements or is it adjusted against the cash balance (credit card is issued by the same financial institution where the company's cash is held) since we are on the cash basis?
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