Personal Funds Used in Company Expenses
My company is a sole proprietorship. Throughout 2010 I have used personal funds for expenses. How do I show these amounts through my company?
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02/26/11 11:15am PST
Viewed by asker 03/22/11 9:49am PDT
Viewed by asker 03/22/11 9:49am PDT
6 Replies
mkhan
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02/26/11 12:48pm PST
I am pasting an answer & link from intuit support.
Owner Paid a Bill from Personal Funds and Needs to Enter Into QuickBooks
Description How do I input when an Owner has payed a bill from his personal funds and will need to be reimbursed later?
Solution Description
The easiest way is to create a journal entry and then apply that journal entry to the bill as a credit. To do this:
1. Go to Accountant or Company drop down at the top of the screen
2. Click on Make General Journal Entries…
3. In the first line of the journal entry:
- •Choose Accounts Payable
- •Fill in the Debit column for the amount
- •Enter the vendor’s name under the Name column
4. In the second line choose the Owner’s Equity (or other account you want to track it in) and fill in the credit amount.
5. This creates a credit for that vendor in the Account’s Payable Account
6. To link the credit with the bill:
•Choose the Vendor drop down
•Click on Pay Bills
•Place a check mark the Bill the Owner paid
•Click on Set Credits, on the middle right of the screen
•choose the correct credit here, if it was not already checked.
•Click Done
•Click Pay Selected Bills
7. Now the Bill will show as paid and there is a positive amount in the equity account to the Owner.
8. To pay the Owner, write a check using the same account used in step 4 as the offset account on the Expenses Tab of the check
http://accountant.intuit.com/support/document.aspx?product=QBAE&id=SLN44027
Second method: The above method is the best way, however, I also use a simple method some time. that is I just made a journal entry using related expense and equity account. I just debit for the related expense account and credit owner equity account. you have to categorize expenses properly before making any entry. Suppose if owner spend his own $500 for business supplies and $200 for Advertising last month. Then I can go to make a journal entry. and I will
- In first line- select account named "supplies/office expense" and enter $500 in debit column
- In second line_select account named "advertising and enter 200 in debit column.
- In third line_select account owner equity/contribution and enter $700 (500+200) in credit column.
Good luck. if this is the answer pl click solved.
Hope this helps. If so please mark solved. Or if you like it-then click thumbs up. Thanks
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02/26/11 2:34pm PST
Thank you so much for your help. How will this affect my balance sheet? Also, if I want to pay myself back for the money I've personally applied toward my business, how will that work?
Thank you!
Benita Roberts
02/28/11 1:24pm PST
The solution
Expense account will go to the profit and loss and equity account will show in the balance sheet. ( P&L eventually go to the Retained earning that will effect the balance sheet)
For example in above example the $700 the you show to the equity account will show under balance sheet as owner equity/contribution. When you want to pay back your money. then you can write a check and select owner equity.
Suppose, you want your $700 back, then write a check and select equity under account. this will decrease your equity balance and of course cash balance by $700 in the balance sheet. (there is other method too, but you will be confused this is simple one).
01/22/12 12:25pm PST
What if I need to reimburse an employee for their expenditure using their personal funds? They are not usually paid back right away!
01/22/12 7:31pm PST
Use accountable plan.
An accountable plan: To qualify, your employer's reimbursement must include all of the following.
- business connection: the expense must have a business connection. Expenses incurrd by an employee while doing his or her job usually have such a connection.
- Proper substantiation: the employee must adequately account to the company for expenses within a reasonable time. Adequate accounting means completing expense reports and providing the company with recipts, invoices, and other documentary evidence of the expenses.
- Return of the excess reimbursement: the employee can't keep unused advances and must return to the company any excess reimbursements within reasonable time.
It is good to keep accountable plan in writing in case of audit.
Employee needs to submit the form for all expenses within reasonable time for reimbursement. Then business owner/or S corporation record office expense deduction for the check re-imbursement.
Example: Suppose employee submit following expenses
- Travel 400
- meals: 100
- Office expenses: 200
When business owner receive above report, they need to record tol record these expenses accordingly when they write a check to the employees.
- Go to the quickbooks, write check window, select name/employee, the write $700 and go to the account and select each above account accordingly with each expense that is travel: 400, meal: 100, office expense: 200 etc.
03/10/12 2:13pm PST
Latest post
create a bank account simmilar to petty cash or checking act. called personal. you can show you expenditures here and it is very clean looking on a register to show you personal spendings on business.
