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MontanaDi
February 1, 2022
Question

Purchase of my business

  • February 1, 2022
  • 1 reply
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I purchased my business for $150K. I am new to this and I am getting my reports together for my accountant.

I received 3 different loans to cover this which were deposited into my business account before I had the cashiers check made out. My question is where do I put the cashiers check that I gave to the seller that came out of my bank account. I have it under a general expense but I don't think that's correct. It doesn't look right on my profit and loss.

1 reply

P
Pete_Mc
February 1, 2022

First the Loans Accts.  You may have already set this up, but if not...

You need to create a Long Term Liability Account for each Loan.  There may already be an account for "Loans" (or something similar), but if it doesn't exist, create this Long Term Liability Acct.

 

Next set up three SUB Accounts under Loans (also Long Term Liab.) and name them with the Bank/Institute for each of your loans.  If you want, add the Loan Acct#.  Leave the Opening Balance $0 for right now.  (Or again ignore all of this if you've already done it.)

 

Next, if it doesn't exist, set up an Expense Account call Loan Interest.  Some people dump all the Interest Payments into this one Acct.  Or you can setup three more SUB accounts just like above to see the Interest payment for each loan.

 

It sounds like you may have deposited the money into your Checking account already.  If you did not already set up the above, then go back to those Deposits now and change the associated Account to the appropriate Long Term Liability Acct you created above.  If for some reason you made one deposit with all of the money from the loans, make it a Split entry.  When you get done the appropriate amount of the Loan should be in the appropriate Loan Liability Acct.

 

For the Payment to the prior owner, that is one that you're going to have to ask your Accountant.  There are different ways to register the purchase pending if it was Fair Value, Stock and probably other ways.  For now I would show the payment as:

Date..."Teller" in the Ck# Field... Name the Cashier Check was made out to...  Amount

For the Account, for now I would use the Owner Equity Acct.  The Accountant will probably change this, but it is a good place holder until you can talk to them.

 

 

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