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J
jamiew
March 13, 2019
Question

How to record Owner's Contribution and Distribution

  • March 13, 2019
  • 2 replies
  • 0 views

Hi All,

 

I have a Canadian corp. I spend personal funds on expenses regularly. When I document the expenses I record them under Shareholder Equity - Contributions and call them an expense in the appropriate category.

When I pay myself back for those expenses I record them under Shareholder Equity - Distributions. I've also been recording the distributions as an expense.

Am I recording these entries correctly?

Thanks!

 

2 replies

Rustler
Rustler
March 14, 2019

I suggest you get with a tax accountant there in Canada

 

If this were a US corporation, the answer would be no, I think the same answer would apply though.  Again get with a tax accountant locally

J
jamiewAuthor
March 14, 2019

Good advice.  Thanks for replying.

N
Norman_C
March 22, 2019

Hi Jamiew:

I'd say that the way you are recording the out-of-pocket costs is the way that QBO seems to recommend elsewhere (in the Help).

However, as you are a Canadian Corp and not a sole trader, I'd suggest:

  1. Set up an accounts payable account in your name
  2. Record your out-of-pocket costs as a Supplier Bill - whether from individual items or from expense reports
  3. Pay yourself by cheque periodically

This will keep such items out of Equity, instead setting them up as a liability, and will record expense and HST in the appropriate time period.

Hope this helps.

Norman

A
Anonymous
March 31, 2019

Hi Norman,

 

I've tried your suggestion (to record the amount owing the person in an Accounts Payable account of the person's name), but I'm confused by QuickBooks Online when it then demands that we "Must choose a supplier when paying to an Accounts Payable account."

 

Who would be the supplier, in your example?

N
Norman_C
April 18, 2019

David:

The supplier would be the name to which you are crediting the out-of-pocket expenses eg David Sabine (it that's the name for whom you set up the payable account, as per step 1 of the previous response)

Good luck.

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