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Solomon11
October 14, 2020
Question

How to categorize a credit card payment made by personal account?

  • October 14, 2020
  • 1 reply
  • 0 views

Hello,

I just started my LLC and there were fees I had to pay before I could establish a business banking account. So some of those expenses I paid for with my credit card (used for business expenses exclusively) and paid those charges with my personal checking account. How do I categorize those payments? I'm guessing its "Owners Investment" correct?

1 reply

Rebecca R
Rebecca R
October 15, 2020

Hi there Solomon,

 

Congratulations on starting your business! That's a huge accomplishment and I'm so happy to hear that you've chosen QuickBooks as your small business accounting software for this journey. It's important that you're able to accurately account for all business expenses, especially those paid for using personal accounts. Let me explain how you can do this.

 

As you suggested, you can create an account in the Chart of Accounts called Owner's Equity or Owner's Investment and categorize the charges to that account since they represent an investment of personal funds into the business. If you'll be paying yourself back for the charges, you can also record them against your Accounts Payable as an expense, with yourself listed as the supplier.

 

If you're working with an accountant, they would be a great resource to consult with this type of question. They are trained and knowledgeable about best practices when it comes to the mixing of personal and business funds. Invite your accountant to work in your QuickBooks with you by navigating to the Accountant tab on the left, then entering their email and clicking Invite. If you don't have an accountant yet, we have a huge list of QuickBooks Certified accountants that would be happy to assist you. The Find a pro to help button will point you in the right direction.

 

Congrats again on your new business! Best of luck! 

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