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DBarrow2
October 17, 2024
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How do I handle a personal expense on a business credit card?

  • October 17, 2024
  • 2 replies
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My boss used our company card to make a purchase he is going to pay for out of his own pocket. Is it possible for us to have him pay the credit card directly and not enter either the charge or the payment in QBO? Or will that mess up our reconciliation? If I can't do that, should I record the expense to a miscellaneous expense category, then have him pay the company and record that as a credit to the same expense category? Are there any other options to make this less complicated?

Best answer by Rainflurry

@DBarrow2 

 

"Is it possible for us to have him pay the credit card directly and not enter either the charge or the payment in QBO? Or will that mess up our reconciliation?"

 

Yes, and IMO it's the preferred way to do it - just leave it out of the company books completely.  Reduce the ending cc balance on the next reconciliation by the amount of the personal charges and it will reconcile fine.  

2 replies

FishingForAnswers
FishingForAnswers
October 17, 2024

@DBarrow2  No need to make up an expense account.

 

The exact name of the account will vary based on the type of company you are (Sole Proprietor, Partnership, S-Corp, etc), but it comes down to the same concept.

 

When an owner or such like takes money out of their business, whether by drawing cash or making a personal purchase, it should reduce their Equity in the business.

 

Likewise, when an owner or such like puts money into the business, whether by depositing cash or reimbursing a personal purchase they made, it should increase their Equity in the business.

 

So, use an Equity account (Owner's Draw, Partner 1 Draw, etc) for the account on the credit card charge, and use the same to recognize the credit card payment.

Rainflurry
RainflurryAnswer
October 17, 2024

@DBarrow2 

 

"Is it possible for us to have him pay the credit card directly and not enter either the charge or the payment in QBO? Or will that mess up our reconciliation?"

 

Yes, and IMO it's the preferred way to do it - just leave it out of the company books completely.  Reduce the ending cc balance on the next reconciliation by the amount of the personal charges and it will reconcile fine.  

    D
    DBarrow2Author
    October 17, 2024

    That sounds great. Thank you!

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