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As the Company Owner, do you ever use personal funds to buy things for the business?

Accountancy Software QuickBooks Online Pro Plus

Recording that transaction in accounting packages generally requires a journal entry. But all those debits and credits can be quite intimidating! Here’s a workaround to record an owner purchase in QuickBooks Online Plus. Depending on if the business reimburses the owner or not will dictate how you record it.

If the owner is reimbursed, immediately or later…

If the owner wants to be reimbursed immediately, simply write a cheque and complete the” Write Cheque” details on the home screen by:

  1. Click Create (+) > Cheque.
  2. Print the Cheque or enter the check number (for handwritten Cheques).

If the owner wants to be paid later, enter the purchase as a bill, and simply complete the “Bill” details on the home screen by:

  1. Click Create (+) > Bill.
  2. Enter the owner as the vendor.
  3. Select an account to categorize what the owner bought for the business (what type of expenses was it)
  4. Pay the bill later by clicking Create (+) > Pay Bills at a later date.

If the owner isn’t reimbursed

If the owner isn’t reimbursed, this transaction embodies an investment in the business. You can record this in an equity account called “Owner’s Contribution. Accountants normally record this transaction with a journal entry. But here’s a workaround for the rest of us:

  1. Click Create (+) > Expense.
  2. Enter the owner as the vendor.
  3. Select an account to categorize what the owner bought for the business (what type of expenses was it)
  4. Enter Owner’s Contribution on the next line and enter the amount as a negative number.

Note that the expense total is ZERO because the business didn’t spend any money, it was an investment from the Owner.

Notes

  1. It doesn’t matter if the owner used cash, a credit card, or a personal cheque.
  2. If your company has a more complex structure like a partnership or corporation it may be best to consult your accountant to determine which equity account to use.

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