Tracking money spent from personal account before opening business checking acct
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I spent money out of a personal account to purchase software, hardware and web hosting services before I established my bank account. How do I accurately track that cost in QuickBooks?
Answer
I enter it in as a cash purchase. You can do this by the write checks. There is a drop down menu for accounts, just select cash. Make sure you zero out your cash account at the end of the year by a journal entry. You can put it in Office expense or make sub catagories from the office expense, such as software.
Answer
You have two spearate questions that require two separate answers. The software/hardware and web hosting services would be considered start up expenses. The amount of start up expenses you can deduct depends upon the structure of your business as well as the entire cost of start-up. Software and hardware MAY need to be amortized. This is something you should check with your tax professional on.
As far as putting it into Quickbooks, you should post the expenses to the owner's equity account. The money you spent is an investment in the business.
Answer
I was advise by my accountant to log start-up costs which was paid with my personal money to Shareholders Distribution account. I made General Journal entries to:
DEBIT the Expense account
CREDIT Shareholder Dist.
This will keep track of your personal money loan to the business, and you should get it back once the business starts making a profit.
Hope this helps
Answer
You will want to show the money as an owners investment. Do a journal entry debiting the expense or asset account and crediting an owners investment account. This account shows how much money you put into your business.
PLEASE mark this 'solved' if this answered your question. If not, please clarify on your reply.
Thank you,
Rebekah
Record Time Bookkeeping
Answer
If you are a sole properietor set up an account "Owner's investment" (equity Account), if you are a corporation, set up an account "loan from shareholder". Then charge each of the purchases against the proper expense or fixed asset account.
Kathy Cazin
Accountkeepers of San Diego
Comment
I also have the same question. I would like to add to it though... What would these items fall under in your accounts?i.e. Office Expense (other), Office expense (admin), Other Expense, Misc?