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Old 02-20-2005, 03:37 AM
lizfarley lizfarley is offline
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Join Date: Feb 2005
Location: NJ
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Personal funds used to pay business expenses

I have a home based business (sole proprietorship). Which is the best way,( for accounting and income tax purposes) to enter bills for business expenses (like telephone bills) that are paid with my personal funds? I have set up an account called "company owes me" that i use to track money that I transfer from my business checking to personal checking (and vise versa). But how do I pay a bill with my personal checking account that has been recorded through the "pay bills" window? When I try to pay this bill, my only choices are "Bank Accounts." I did set up a bank account called "Personal Checking" and when I use that account to pay a bill, it doesn't show up in the "Company owes me" report. I need to record this as an expense incurred by the business, but also show that I have used my personal funds.
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Old 02-20-2005, 05:50 AM
Kendor Kendor is offline
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Join Date: Oct 2002
Location: Johannesburg South Africa
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I don't think it a good idea to have an account in your business books styled "Personal checking". This may lead to confusion between the business' accounting records and your own, as I think has happened in the situation that is troubling you. In effect, the way you have set up QB, the Personal Banking account is just another Company Owes Me account, as you call it. But setting it up as a Bank account, not an Equity account, adds to the potential for confusion.

In accounting there are usually several ways of acheiving similar results, but I suggest that the best for your situation would be:

1. Use the General Journal Entry window. From the drop down list under Account select Company Owes Me (which I take it you have correctly opened as an Equity account) and in the credit column enter the amount. From the drop down list under Debit select the relevant account for whatever you bought, eg Stationery. In the Memo field for each of the credit and debit entries you can, if you like, record any further information that you think may be useful in relation to that entry. (Due to a bug in QB, the information doesn't always get carried forward to reports, but you can always easily drill down and get it.) From the drop down list under Name opposite the debit half of the entry, select the name of the Supplier from whom you bought the goods, if you would details of the purchase to appear on Supplier Reports; and

2. Use the Write Check window if and when you re-imburse yourself. Select the business' Checking account to write the check from, and select Company Owes Me from the drop down list under Account.

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Old 02-20-2005, 05:52 AM
Kendor Kendor is offline
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I should have added that you then don't need to use Enter Bills and Pay Bills at all.

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Old 02-20-2005, 09:27 AM
suzannemead suzannemead is offline
Join Date: Nov 2003
Location: Woodbine, MD
Posts: 5,374
If you want to track what is being spent with the vendors you are using and have the ease of paying through the Pay Bills window, set yourself up as a "credit card" type account. You entries into this account will be made through the Banking>Record Credit Card Charges>Enter Credit Card Charges window. If the company wnts to pay a bill using your funds the "credit card" will show up as an account on your Pay Bills screen. When the company wants to pay you back some money just write a check and post it to this account. It is very simple. You should try to keep business and personal separate, but if you can't, this method works well.
Suzanne M. - "Better Books"
Certified Quickbooks ProAdvisor in Pro.,Prem. & Enterprise /
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