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jo-lee
jo-lee
September 2, 2023
Solved

How do I record personal expenses (and reimbursement) from an account through a vendor, set up as a bill in QBO?

  • September 2, 2023
  • 2 replies
  • 0 views

My client has an account with Lowe's.  He used his contractor account to pay for a personal expense.  I normally post these charges as bills, and pay them with the business checking when the statement comes, marking them as paid at that time.  My client had me deduct the cost of these expenses from his paycheck to reimburse the business for them.  The Lowe's bill is not due yet.  How can I post all this accurately?

 

I realize with an expense that's paid for with a credit card or bank account, I can create an expense for the charge, then pay it, reimbursing the company.  But I don't know how to pay a bill like this because, later on, I will need to pay the bill with a business check when the statement comes.  So, I can't pay it the bill beforehand with his Owner's Draw/paycheck and pay the same bill later when I write a check out to Lowe's.

 

Best answer by Rainflurry

@jo-lee 

 

With all due respect to QB employees, do not take their advice on this.  They are not qualified.  I know they are trying to do their jobs and someone is making sure they reply to these posts but, as you've seen, they do not appear to be accountable to whether they are actually answering the customer's question.

 

When you deducted the amount from his paycheck, that amount is sitting in a liability account, correct?  If so, create a journal entry to move that liability to the Lowe's credit card: debit the payroll liability account, credit Lowe's credit card.  You should now have the amount sitting in the credit card liability account waiting to be paid.   

2 replies

G
GebelAlainaM
September 2, 2023

Hello, @jo-lee. Thank you for the detailed information about your concern about recording personal expenses from an account through a vendor that was set up as a bill in QuickBooks Online (QBO). We're here to help you.

 

We understand the importance of tracking your sales and expense transactions in QBO to keep your account accurate. 

 

Initially, we want to let you know that we don't propose mixing business and personal expenses. That way, you can go over your business flawlessly. However, there will be times when we can't prevent it from happening. So, if that time comes, we can follow the process below to handle it in QuickBooks Online (QBO).

 

In this case, we're going to create a journal entry to record the business expenses you paid for with personal funds. After that, we can choose a way to reimburse it, either to record it by checks or expense. When doing the process, we suggest consulting with your accountant or a QuickBooks Certified ProAdvisor to guide you through the process to ensure the accuracy of your account since they know what's best for your business.

 

To create a Journal entry, here's how:

 

  1. Click + New and choose Journal Entry.
  2. Select the expense account for the purchase.
  3. Enter the purchase amount in the Debits column.
  4. Next, select Partner's equity or Owner's equity.
  5. Enter the same purchase amount in the Credits column.
  6. Then,  Save and close.

 

For the reimbursement using a check:

 

  1. Click + New and select the Check.
  2. Choose a bank account to use to reimburse the personal funds.
  3. From the Category column, select Partner's equity or Owner's equity.
  4. Type the amount to reimburse.
  5. Then select Save and Close or Save and New.

 

But if you want to reimburse using expenses, refer to this article for additional details: Pay for business expenses with personal funds.

 

Additionally, you may visit this article for future reference in managing your account in QBO:

 

 

Let us know if you need anything else related to QuickBooks, @jo-lee. We are always happy to lend a hand to you. Take care always, and have a great business!

jo-lee
jo-leeAuthor
September 2, 2023

Thank you for the prompt response.  This is actually a personal expense paid for with a business account through a vendor, not a business expense paid for with a personal account.

 

Does that change things, and if so, how?

L
LollyNino_C
September 2, 2023

Thank you for getting back to us, @jo-lee. I can assist you in managing personal expenses incurred from your business account in QuickBooks Online (QBO).

 

You'll need to record the expenses and then reimburse them to ensure your books are updated. I'll guide you in this process: 

 

  1. Go to + New > Check or Expense.
  2. Select a Payee from the dropdown menu.
  3. Choose the Bank Account, Cash Account, or Credit Card you used to make the purchase.
  4. In the Category details section, select the dropdown menu to select the tax category that fits your needs.
  5. Enter the Amount of the purchase.
  6. Tap Save and Close.

 

Once done, reimburse the company.

 

  1. Go to + New > Bank Deposit.
  2. Select the Account to add the reimbursement to, and choose the Date.
  3. Go to the Add funds to this deposit section. In the Received From field, enter the person who made the personal expense, then select the account.
  4. Choose the Payment Method and enter the reimbursement amount.
  5. Tap Save and Close.

 

When dealing with accounts that may be affected by mixing personal and business funds, I strongly recommend seeking expert advice from a qualified accountant. They can offer valuable suggestions and ensure that your books are accurate and error-free. An accountant's expertise is crucial in maintaining your business's financial health and compliance.

 

You can refer to this article for more information on the topic: How to pay for personal expenses from a business bank or credit card account.

 

If you have any questions or need guidance on this matter, please feel free to ask, and I'll provide you with the information and steps you need to handle these expenses effectively.

Rainflurry
RainflurryAnswer
September 2, 2023

@jo-lee 

 

With all due respect to QB employees, do not take their advice on this.  They are not qualified.  I know they are trying to do their jobs and someone is making sure they reply to these posts but, as you've seen, they do not appear to be accountable to whether they are actually answering the customer's question.

 

When you deducted the amount from his paycheck, that amount is sitting in a liability account, correct?  If so, create a journal entry to move that liability to the Lowe's credit card: debit the payroll liability account, credit Lowe's credit card.  You should now have the amount sitting in the credit card liability account waiting to be paid.   

    jo-lee
    jo-leeAuthor
    September 5, 2023

    Thank you so much!

     

    I didn't do exactly as you said, because this is not a credit card account, it's just a credit account at the store.  He has no actual credit card and therefore we don't have it set up as such in QBO.  Perhaps we could set it up that way, but it's not - instead we enter all the receipts from that account as bills to pay later.  This complicated matters further, but your direction helped me to get it all straightened out - again, thanks so much!

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