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ScarletCleopatra
December 10, 2024
Question

Why can't I use an equity account as payment account for receipt?

  • December 10, 2024
  • 1 reply
  • 0 views

Hey there,

I have an expense for some items I bought for my business. I paid for the items and want to reimburse myself eventually. So, I scanned in my receipt. The receipt was read properly. I then went to review the receipt. I split the transaction across the relevant categories. Then I chose my owner's investments equity account for the payment account. Now I cannot save and close the receipt.


I have found a workaround that annoys me to no end. I have changed the Payment Account to my bank account and added a split for a negative line item to the equity. Now, I have a $0.00 transaction in my bank account journal. Even more annoyingly, I have to deal these zero'd out transactions at reconcile time. This seems like a very bad UI.

 

Is there a better way to setup my owner's investment account so that I can directly post payments to that account? I would still like to take advantage of scanning in my receipts and having the transactions created from the information on the receipt. Or maybe there is a better way to account for expenses paid via an owner's non-business account (be it credit/cash/whatever else).

 

If that isn't possible, why can't I post the payment directly to my owner's equity account so that I can keep track of the amount of my investments without hacks like this? I am not a very sophisticated business owner, and I'm worried that I end up with a bungled transaction account for one of these transactions.

1 reply

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NicoleAscencionS
December 10, 2024

Thank you for reaching out to Community, Scarlet.

 

I'm glad to share insights about recording expenses paid with personal funds. The Payment Method dropdown list will only show bank and other current asset accounts. Since the Owner's Investment is an equity account, this is why it won't show up on the list.

 

To record items paid with personal funds, you can create a Journal Entry. With this, you can directly affect the expense account used for purchase and the Owner's Investment account.

 

Here are the steps:

 

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

 

Once everything is set, you can record the reimbursement by creating either an expense or a check. To record it as an expense, follow these steps:

 

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

 

For additional reference in reimbursing personal expense, see this resource: Pay for Business Expenses with Personal Funds.

 

Furthermore, if you want to see all payments you made to your vendors, check this link for more information: Run a report with the vendors' total.

 

If you have more questions about recording expenses, feel free to Reply to this thread. I'm always here to assist you.

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ScarletCleopatraAuthor
December 11, 2024

Okay, so my bloody comment just got deleted because the Qualtrics survey popped up randomly while I was typing. There are so many bugs on this community UI. I even had to type the numbered list manually below as the WYSIWYG controls for the numbered list above don't seem to work correctly. I guess at least that is consistent between the Intuit products I have experienced.

 

Let me try to explain why you manual entry of journal entries in the owner's equity is a bad solution.

 

The tools for handling receipts are pretty powerful and convenient in quickbooks. Your solution has me bypassing all the convenience to manually enter everything. That's kinda unfortunate at the very least.

 

Here's the solution I like better:

1. Upload a receipt for process

2. After processing, click the review for the receipt

3. Make a "bill" instead of an expense

4. Add a line item to zero out the bill with a negative entry posted to appropriate member equity account

5. Save the bill

 

This has the advantage of letting the QB receipt workflow process the receipt and import the relevant data, like the total and the vendor.

 

The downside is that I have an zero'd out transaction for each receipt in my A/P account now. This makes absolutely zero sense when the equity account should probably just be allowed alongside the Bank accounts for the payment account for an expense. Or maybe there should be a workflow for paying with owner's non-business funds.

 

I really do not understand why equity accounts shouldn't be able to be used this way.

Rainflurry
Rainflurry
December 11, 2024

@ScarletCleopatra 

 

There's no need to use a journal entry as suggested by @NicoleAscencionS.  If you don't want to use a $0.00 Bill or Expense transaction, create a bank account in QB called 'Clearing Account' and use that as the bank account from which to pay the Bill or Expense.  Then, move the balance from the Clearing Account to your Member Equity account using a Transfer (New > Transfer).  The Clearing Account should always be $0.00 after the Transfer.    

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