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K
kq40_2
April 2, 2020
Question

I've deposited client funds to a personal bank account, then transferred to business account. How can I track this?

  • April 2, 2020
  • 1 reply
  • 0 views
Okay so I have 1 personal checkings account, and one newer business checkings account. Currently, both accounts are linked to my QB. I didn't have the business account open at first, so I was using my personal to deposit client payments, as well as paying off a business credit card. Then I got my business account, and I transferred the client payments there. I'm wondering, how can I keep track of this on QB? Should I have this personal account linked to QB, and if so how do I exclude all personal expenses without messing up my balance sheet? If not, how do I track the client payments and the business credit card expenses (paid off with personal funds)? Thanks so much!

1 reply

R
Rochelley
April 8, 2020

Hello @kq40_2 

 

Trying to keep a personal and a business account inside QB can get very muddy if you don't track everything properly.  First of all, if you were using your personal account for both business and personal, how have you been handling withdrawing personal monies and paying for personal expenses up until you got your business account?

 

At first glance, my thought would be to get a new personal bank account and keep it outside of QB.  You could disconnect the bank feed for the current personal account, but I'm not sure if that would do anything to your historical data or not.

 

The balance in your current personal account should be transferred to your business account to bring it to $0.00, presuming it is actually business cash residing in that personal account.  If it is personal cash, then withdraw or transfer to your new personal account (outside QB) posting to Owner's Draw.  If you transfer the remaining personal balance to the business account, post to Owner's Equity.  Then de-activate the account.

 

From now on, everything would be tracked through your business account.  On the occasions that you use personal money for a business expense that is paid in cash, you would create a JE that debits the expense and credits Owner's Equity, obviously keeping the invoice or receipt as back-up, and showing that your personal account paid for it.

 

Any money you withdraw or transfer from your business account to your new personal account outside of QB, would be posted to Owner's Draw.

 

Any money you transfer in from your new personal account to your business account would be posted to Owner's Equity. 

 

If you use a personal Credit Card for business expenses, it doesn't hurt to add that credit card into QB, but only track the business expenses in there.  If it is your new personal account making the payments on the credit card, then once a month or whenever its suitable, whatever the balance is in the CC account, you will pay to yourself to cover the business expenses on the card.  Just make a note in the memo that these are "bus. expenses pd by personal CC".  When you write the cheque from the business account, you will be posting to the CC account, but since we know that everything in there was paid for by personal monies, the cheque will actually be written to yourself.  The CC account is set up for tracking purposes only and you will clear it out to $0.00 each time you reimburse yourself for the business expenses that were in there.

 

Hope this helps :)

    T
    TAP-dketch
    January 14, 2022

    Follow-up for @Rochelley 

    I don't have personal account in my QB, but I did mistakenly deposit a client check in payment of an invoice into a personal account. I can't "uncash" it with my bank and re-do the transaction, so the question is, Do I transfer the money to the business account and create a QB transaction for Owner Investment? If so, what would be the transaction to link that money to the client invoice to show it is paid? Just do a credit memo for that entire amount?

    R
    Rochelley
    January 14, 2022

    Hi @TAP-dketch ,

     

    You could do this a couple of different ways:

     

    1.  Don't move any money from personal to business.  Record a Receive Payment from your client as you normally would, using the date the payment was received.  Make a note in the Receive Payment window that the money was accidentally deposited to your personal account and you are now paying on behalf of client.  When you do this, the payment should automatically be going to the Undeposited Funds account.  Now create a Journal Entry as follows:

    AccountDescriptionDRCRBalance
    Undeposited FundsTo account for customer $ accidentally deposted to personal bank acct 1000.00

    -1000.00

    Owner's Draw (or S/H Loan if incorporated) 1000.00 1000.00
      1000.00-1000.000.00

    Owner's Equity:Owner's Draw (if you are a sole proprietor or partnerhship).  If you are incorporated, then offsetting account would be Shareholder's Loan.

     

    2.  Write a cheque from personal to business account.  Record a Receive Payment from your client as you normally would.  In the Receive Payment window, make a note that the money was accidentally deposited to your personal account and you are paying now on behalf of the client.  When you do this, the payment should automatically be going to the Undeposited Funds account.  Then go to your Bank Deposit form.  The amount sitting in Undeposited Funds will be available to include in the deposit.  Deposit to the your business bank account like you normally would.  That's it.  Money will be in business account and client's receivable will be paid.

     

    Both methods accomplish the same thing; I would suggest the first one is easier as it doesn't involve you having to write a cheque and deposit to business bank account.  Hope that helps!

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