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powerappled
July 11, 2020
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Personal Credit Card for expenses

  • July 11, 2020
  • 1 reply
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Hi, I have two questions.

 

1. We are currently using a personal credit card for business expenses and applying the expenses to a supplier account (name of owner of the business) and putting the expenses towards accounts payable. Is this the correct way to go about it?

 

2. If we set up a new credit card (Still hypothetically a personal credit card), but purely only used that card for business expenses, would if be any different to set it up as a normal credit card through the quickbooks system? Sorry if this is a bad question, I am new to quickbooks and was wondering about this for awhile. 

 

Thanks.

Best answer by LeithG

Hi powerappled

 

For the recording of personally paid expenses, the way you're doing it is perfectly acceptable, recording it as an accounts payable amount; as an alternative, you can also record it against "Owner's Equity" since it represents a personal investment of funds by the owner into the business.  If the intention is to pay the employer back for the money spent, the accounts payable option might work better, and you can issue the money back via the expense reimbursement pay type for payroll if you're so inclined.

 

With respect to the second credit card, it's never a bad idea to separate personal and business finances when possible; leads to a lot fewer questions in the long run.  If the second card is strictly used for business purchases then yes, you could link it to your Quickbooks account for auto-reconciliation as transactions are posted/imported from the credit card company.  The nice thing about having a dedicated card for the business too is that the fees, interest payments and other credit card related items can all be charged directly as business expenses too!

1 reply

LeithG
LeithGAnswer
July 13, 2020

Hi powerappled

 

For the recording of personally paid expenses, the way you're doing it is perfectly acceptable, recording it as an accounts payable amount; as an alternative, you can also record it against "Owner's Equity" since it represents a personal investment of funds by the owner into the business.  If the intention is to pay the employer back for the money spent, the accounts payable option might work better, and you can issue the money back via the expense reimbursement pay type for payroll if you're so inclined.

 

With respect to the second credit card, it's never a bad idea to separate personal and business finances when possible; leads to a lot fewer questions in the long run.  If the second card is strictly used for business purchases then yes, you could link it to your Quickbooks account for auto-reconciliation as transactions are posted/imported from the credit card company.  The nice thing about having a dedicated card for the business too is that the fees, interest payments and other credit card related items can all be charged directly as business expenses too!

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