Entering our personal funds into quickbooks

[Jackirah]

Hi. Could anyone please help me? I found this forum the other day and have gathered great info from it already, so thought I'd ask a question I am having trouble with.
1. My husband and I have recently started our own business and have put some of our own money into it to kick it off. I was wondering if anyone could tell me how I put this into quickbooks without it appearing as "income"? I have set up a "personal loan" account with our names and the account as "other current liability". Is this right? How do I get the money to appear in the businesses bank account?

2.The other thing I am having trouble with (which is a similar problem). The company we have set up is basically sub contracting back to my husband's former employer. They are assisting all their former employee's in establishing thier individual companies, and as such for the first 3months they are "loaning" us a wage to float us over until the jobs we are working on start progress payments as our income. We have to invoice them for the "wage" and they will then pay on the invoice. My question again is how do I show this in Quickbooks without it appearing as a wage seeing as though it is money coming in from an invoice?

Sorry it sounds so long winded but I wanted to give as much info as possible.

[Susieq_56]

Originally Posted by Jackirah

Hi. Could anyone please help me? I found this forum the other day and have gathered great info from it already, so thought I'd ask a question I am having trouble with.
1. My husband and I have recently started our own business and have put some of our own money into it to kick it off. I was wondering if anyone could tell me how I put this into quickbooks without it appearing as "income"? I have set up a "personal loan" account with our names and the account as "other current liability". Is this right? How do I get the money to appear in the businesses bank account?

2.The other thing I am having trouble with (which is a similar problem). The company we have set up is basically sub contracting back to my husband's former employer. They are assisting all their former employee's in establishing thier individual companies, and as such for the first 3months they are "loaning" us a wage to float us over until the jobs we are working on start progress payments as our income. We have to invoice them for the "wage" and they will then pay on the invoice. My question again is how do I show this in Quickbooks without it appearing as a wage seeing as though it is money coming in from an invoice?

Sorry it sounds so long winded but I wanted to give as much info as possible.

I can answer your first question but not your second one. We were advised to put the initial money we started the business with into the account "30000-opening balance equity" & thereafter for any other money we put in ourselves, I've started another account as sub account of that one "31000 - So & So's Personal Loan". It doesn't show as income but is does appear in the business bank account & all seems to work ok for me. Hope that's right & hope that helps with your first question.

[Joe Williams]

I recommend that you use the Other Liability type account for loans, one for each person or company that loan you money. If you need to show the P&L and Balance sheet reports for a loan, they will understand them better.
Enter the loan amount as a deposit to the bank account and use the loan account in the For Account. To pay on the loan, use a check for that account.

[Jackirah]

Yay!! It looks like that helped and has fixed my first question. Thank you soooo much

Do you think I could do the same thing for my second question? My concern is that the payment from my husband's work is being paid on an invoice that we have generated, but it is still a loan, not income and I need this to be reflected.....aaarrgghh

[RobJoy]

Bearing in mind that you are in the UK, and our tax laws (bless them! Not) are different to the US, I'll tell you what my husband and I do with our set-up-with-our-money company. We have a bank account called 'Directors loan account' As a bank account, we can easily use it with Pay Bills, transfer money to and from it and the business bank account (with no tax implications at the time of the transaction), post dividends and/or net taxed salary payments (from our company, PAYE, if any, paid by our company) and then do whatever we need to with the balance at the year end.

So if you put your personal money into the business bank account you simply use Bank Transfer: from Directors loan account to Business bank account. If you take money out, vice versa.

If you pay for a company expense (petrol? car park? stationery from Staples?) from your pocket or private bank/credit card you use Cheque or Pay Bills from Directors loan account.

If you register as an employer and 'pay' yourselves a taxed salary you record it as paid from the Directors loan account. Simialrly if you declare a dividend you journal it to the Directors loan account.

Now for your former employer's subsidy. Set up an Other Charge item called something like 'Startup subsidy loan', hitched to an Other Current Liability account 'Startup subsidy loan' - so it won't appear in your P&L. Create invoices for the subsidy to the former employer using that item. When they pay it, you just receive a payment in the normal way. When you come to create a 'normal' invoice to them for goods or services, add a line with a negative amount to take off some of the loan. E.g. First send them an invoice for Startup subsidy loan, amount £1000 (you can leave the VAT code as a fullstop, or make it 'O', if you're registered). Then you need to invoice them for £1500 services, so the first invoice line says Services, £1500 (normal VAT code), the second says Startup subsidy loan, -£1000, net invoice total £500. The 'real' income of 1500 goes to your P&L, you have an invoice for £500 to send them and to receive payment. If you have to 'wipe out' the whole amount against the loan, QB will be quite happy for the invoice total to be zero.

[Jackirah]

Thanks so much RobJoy! I think I have it sorted. Thanks for taking the time to reply

I am actually in Newcastle, Australia so our tax laws are different again, as you say (bless em) hehe. Although the tax is different I can understand the basis of what you are saying and I think it would still work in our system. You have made it a little clearer.

Thanks again!