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J
jordande
January 2, 2024
Question

Started an LLC in 2023, paid for lot of expenses with personal funds - how to handle it?

  • January 2, 2024
  • 1 reply
  • 0 views

Hi all -

 

First off welcome to 2024 - it's a new year and a new beginning. Hope everyone has a wonderful year ahead of them!

Second - i am not sure what happened, it seems i may have created a blank post with jsut a title, but am not sure how to delete it(or even edit). 

 

Long story short, my wife and I started a new business as an LLC in Washington state. This year we have absolutely zero sales in the company and had no expectations of any as we developed our product and did lots of testing prior to starting our patent work. This is all new for us, and as such we went months without having a business account due to some application errors(and as such the bank denying our application). We continued to spend for R&D/testing/developing/equipment purchases for our product development with personal funds. We realize now (after the fact) that we should have 100% stopped what we were doing and sorted the bank stuff out and front loaded the business with some funds to cover these purchases. 

 

That said, now that we've got 6 months into the business and expenses racked up on our personal side of accounts, what would be the best way to go back through and track business expenses that we covered with our personal funds? 

I know the first thing we have to do is completely switch off the spending from our personal accounts for business expenses, but knowing that taxes are due in April, I am wanting to get things a bit more organized and "isolated", but I'm not entirely sure how i should be logging things in Quickbooks Online that have been spent from my personal bank account.

1 reply

R
RCV
January 3, 2024

Let me help you with recording the business expenses you made with personal funds in QuickBooks Online (QBO), jordande. 

 

Although we recommend not to mix business and personal funds, we know it happens sometimes. We can record the business expense you paid for with personal funds by following the steps below: 

 

  1. Click the + New Plus icon. 
  2. Select Journal Entry.
  3. On the first line, choose the expense account for the purchase.
  4. Enter the purchase amount in the Debits column.
  5. On the second line, click Partner's equity or Owner's equity.
  6. Enter the same purchase amount in the Credits column.
  7. Press Save and close.

 

Then, we can reimburse the money as a check. Here's how:

 

  1. Click the + New Plus icon.
  2. Choose Check. Or if you're in the Business view, follow the steps to switch to the Accountant view first. Then come back to these steps.
  3. Select a bank account to use to reimburse the personal funds.
  4. In the Category column, tap Partner's equity or Owner's equity.
  5. Enter the amount to reimburse.
  6. Press Save and close or Save and new.

 

Also, we can record the reimbursement as an expense. Let me guide you on how: 

 

  1. Click the + New Plus icon.
  2. Select Expense.
  3. Choose a bank account to use to reimburse the personal funds.
  4. In the Category column, select Partner's equity or Owner's equity.
  5. Enter the amount of the reimbursement.
  6. Press Save and close.

 

Just in case you use a business account to pay for a personal expense, check out this article to troubleshoot the issue: Pay for personal expenses from a business credit card or bank account in QuickBooks Online.

 

Additionally, I've got you this handy article about reconciling an account in QBO: Reconcile an account in QuickBooks Online. You can also visit this page in case you encounter issues after reconciling the account: Fix issues the first time you reconcile an account in QuickBooks Online. 

 

I want to make sure I've got you covered. You can click the Reply button below for follow-up questions and clarifications about recording your transactions in QBO. I'll be in touch.

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