Recording Personal Funds used to pay expenses as Owners Contribution
Happy New Year! I recently started a small business and am paying the startup costs out of personal funds until I get bank accounts set up. I would like to record these expenditures as Owner Contributions (Equity) for balance sheet purposes.
My question is this: I have created sub accounts within "Owners Investment" for each of the credit or debit cards I use to pay the expenses, but when I go to enter the expense I can't seem to get the expense to "link" to the journal sub-account. I've simply been doing double entries (one entry for the "Payment Method" in the expense entry, and then another entry for an Owners Investment for the same amount. I have a feeling I'm doing something wrong...
And as a related matter, on the expenses, what is the difference between the two separate payment entry boxes. The first is "Payment account" and QBO doesn't give you the option to add a new account there, and then "Payment method" that does enable the user to create new accounts. How should these be used?
Thank you for choosing QuickBooks and sharing your concern here on the Community page. I can share with you how to record business expenses paid with personal funds and how to enter reimbursements.
You're correct with recording entries for the expenses paid using the personal funds. Just make sure to select the correct accounts under the Debit and Credit columns.
On the Journal Entry page, select the expense account for the purchase on the first line.
Enter the purchase amount in the Debits column.
On the second line, select Partner's equity or Owner's equity.
Enter the same purchase amount in the Credits column.
Save the transaction.
If you're ready to reimburse the amount, then it's time to enter a check or an expense.
Go to the (+) New icon, then select Expense.
Select the (business) bank account to reimburse the personal funds.
In the category column, pick the partner's equity or owner's equity.
Enter the amount of the reimbursement.
Select Save and close.
The Payment method on the Expense page is the type of payment you want to use for the transaction (cash, credit card, check). While the Payment account is the account where the amount is coming from. You can create a new method or account for both by clicking on the drop-down arrow.
For additional tips about recording business expenses you made with personal funds in QuickBooks Online, you can open this link.
I also recommend checking out the topics from our help articles for more resources while working with QuickBooks in the future.
If you have any other questions, please let me know by adding a comment below. I want to make sure everything is taken care of for you. Cheers!