What Category is this in Chart of Accounts?

[devine5829]

My client is getting money from a family member to sort of float him as he gets his business up and running. What account should I categorize this deposit? Its not income.

[suzannemead]

Set up a loan account under Current Laibility, if it will be paid within 1 year; or Long Term Liablility, if the loan will continue past a year.

[devine5829]

What if its money not being paid back. Its a parent who is giving him money?

[plg]

Then it would be Owners Capital > Investments

[Joey]

I agree with PLG. I would keep the details of the source of the money out of the business. Whether or not he/she pays it back is also a personal matter. Just use Make Deposits and credit the Owners Contributions equity type account for the amount. The company does not owe back the money to the family member, the owner does personally. When these are set up on the business books, most times they will just sit there forever and never get repaid, long after they are forgotten about by both parties. If they do make payments on the "loan" just charge the checks to the Owner's Draws equity account and let the owner pay back the loan personally.

[devine5829]

I don't see "Owners Contribution" "Equity" in my Chart of Accounts. Should I just set a new one up that way with equity as the type?

[Joey]

Yes.