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sk4747
July 18, 2021
Question

Business invoices paid with personal funds

  • July 18, 2021
  • 1 reply
  • 0 views

We have setup a new company (a PREC in Ontario) that took over the real estate brokering business. In the first month as we were transitioning the vendor payments over to the corporation, the expenses were paid with personal funds and later reimbursed from the company. I can record this with a JE. After the first month all the expenses are paid with business credit card and I believe this is to be recorded as credit card expenses matching the vendor to the payment. 

 

Is this the correct approach? Is there any other way to record expenses in the first month than a JE? I am using QBD Pro.

Thanks

1 reply

Noelia Nievas
Noelia Nievas
July 18, 2021

Hi @sk4747 

 

Congratulations on the new company! It is always great to see entrepreneurs succeed and accomplish great things. QBO is a great platform for startup companies and to keep your books organized and balanced. They offer many great features that will help you and your company to strive.

 

Click here to a guide on how to create bills and paying them. You do not have to use the journal entry module to record them. Using the payments module it creates the journal entries on its own.

 

Good luck on your companies future endeavors!

 

Kind regards,

Noelia

N
Nick K
July 19, 2021

Hi sk4747.

 

Entering your bills and expenses using the correct accounts and payment methods is the cornerstone of good bookkeeping. I can help you with this.

 

QuickBooks Desktop makes entering and paying your bills and expenses easy by following a simple path displayed in the program. While using personal funds to make business payments is not recommended since it can create a tax nightmare when sending the information out to the CRA we know sometimes you have to do it. When those times happen you can follow these steps if the payment was made by an owner or partner.

 

  1. Go to the Lists menu and click Chart of Accounts.
  2. Double-click your owner's equity account to open the account register.
  3. In the Increase column, enter the amount that was spent, then press Tab.
  4. If personal items were bought in the same transaction, do not enter those items or amounts. They are not relevant to your company's books.
  5. In the Account drop-down list, select the appropriate expense account.
  6. If the amount you're entering is for more than one expense account and/or is reimbursable by one of your customers, click Splits at the bottom of the register. In the Splits window, associate the appropriate amount to each account, click the Customer:Job drop-down list, and then click the customer and job name.
  7. Click Record.


If you're also wanting to pay the amounts back to the partner or owner you can follow these steps as well:
 

  1. Go to the Banking menu and click Write Cheques.

  2. In the Write Cheques window, make the cheque out to the owner.

  3. In the detail area of the cheque, assign the amount of the cheque to the equity account that you use to record the owner's draws.

  4. Save the cheque.

    To find out more about how to make these kinds of entries or the type of accounts I recommend using the help function in your QuickBooks Desktop program. You can use this feature by going to Help>QuickBooks Desktop Help>Search and type in your question.

If you have any questions feel free to reach out and we'd be happy to help!

S
sk4747Author
July 25, 2021

Thanks Nick. However when I use the journal I can't enter sales tax (HST) amount. What do you suggest I do?

Sunil

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