Skip to main content
D
DoRo
September 16, 2020
Solved

Directors Funds - Transferring money from own account to business account to pay for items - How to record this

  • September 16, 2020
  • 1 reply
  • 0 views

Hi,

Both me and my partner are directors of a new business and I am the one doing the accounts side of things.

 

When we first opened our bank account (business) we transferred money from our own account to the business account to pay for things.  

How do I treat this and were do I post this too as this is money we have never taken back yet?

 

We have also paid for items from our own personal accounts so how would I enter this into our books?

 

Also were would I reconcile the above?

 

Can I also ask so sorry but when you download your transactions from your bank and then you match or add anything as we buy from shops so only have receipts would we need to put each receipt into the expense account so it can be reconciled or does this bank do this once you match amount with receipt?

 

Thank you really appreciate any help that you can give.

 

 

Best answer by GeorgiaC

Hello and Welcome, DoRo 👋

 

We'd recommend checking with your accountant if you're unsure which specific accounts to use, but you can create a liability-type account within your Chart of Accounts to track the loan. 

 

To create a new account, go to Accounting > Chart of Accounts > New and select the relevant account and detail types on the drop-down, then rename this to how you wish it to appear in your accounts/reports. We've got a guide here which you may find useful for steps on setting up the loan account and recording the payment to your bank account.

 

If you haven't already, you'll also need to create your business bank and personal bank individually within the Chart of Accounts. When you come to pay for purchases with the personal account, create an Expense (+ New > Expense) and select the personal account on the drop-down of the 'Payment account' field. You'll only need to enter transactions on the personal account which relate to the business, so you won't necessarily have to reconcile this account. 

 

To reconcile an account, select the Cogwheel > Reconcile and select the account you wish to begin reconciling on the drop-down. You'll need to check that the opening balance showing here is the correct balance on the date that you began tracking transactions in QuickBooks - you can check our guide here if you need to correct this. 

 

When you download transactions from your bank, if these don't already exist in your QuickBooks, simply select 'add' and we'll automatically create a transaction for this - by default, for money out, an expense will be created, and for money in, a sales receipt will be created, though you can change this to deposit or transfer when reviewing the transaction. 

 

Please get back to us below if you have any questions! 🤗

1 reply

G
GeorgiaCAnswer
September 16, 2020

Hello and Welcome, DoRo 👋

 

We'd recommend checking with your accountant if you're unsure which specific accounts to use, but you can create a liability-type account within your Chart of Accounts to track the loan. 

 

To create a new account, go to Accounting > Chart of Accounts > New and select the relevant account and detail types on the drop-down, then rename this to how you wish it to appear in your accounts/reports. We've got a guide here which you may find useful for steps on setting up the loan account and recording the payment to your bank account.

 

If you haven't already, you'll also need to create your business bank and personal bank individually within the Chart of Accounts. When you come to pay for purchases with the personal account, create an Expense (+ New > Expense) and select the personal account on the drop-down of the 'Payment account' field. You'll only need to enter transactions on the personal account which relate to the business, so you won't necessarily have to reconcile this account. 

 

To reconcile an account, select the Cogwheel > Reconcile and select the account you wish to begin reconciling on the drop-down. You'll need to check that the opening balance showing here is the correct balance on the date that you began tracking transactions in QuickBooks - you can check our guide here if you need to correct this. 

 

When you download transactions from your bank, if these don't already exist in your QuickBooks, simply select 'add' and we'll automatically create a transaction for this - by default, for money out, an expense will be created, and for money in, a sales receipt will be created, though you can change this to deposit or transfer when reviewing the transaction. 

 

Please get back to us below if you have any questions! 🤗

D
DoRoAuthor
September 16, 2020

Hi George,

 

Thats great I just wanted to be certain as I have photographed all the receipts even the ones we have paid for out of our account but on some of these we just transferred the money into the business bank account so we could pay for these through our business so just wanted to make sure really.

 

As for the reconciling it was more if I needed to do anything else for the double entry side once anything is added or matched as I have worked in accounts all my life and have never done it from the bank only checked that everything is on at the month end so just needed to know if I needed to create journals for all of these as we only have one or two suppliers the rest we go and buy ourselves.

 

I have created a directors payable account which I have put what we have paid into business bank account in this and then there is a loan one two.  Is there any way just one account can be created so anything the business owes the directors is in it and anything that they pay for personal that this can be put into this same account to offset it so in effect they are slowly taking back what the business owes them.

 

Thank you again for all your help really do appreciate it. :-)

 

 

E
emmam6
August 17, 2022

Hello Doro, We just wanted to add some clarification to 'Is there any way just one account can be created so anything the business owes the directors is in it and anything that they pay for personal that this can be put into this same account to offset it so in effect they are slowly taking back what the business owes them.' If for example you have a liability set up for the directors loan and you want to record any personal transactions they use the business funds for you could reduce the liability amount on the directors loan by attaching expenses to it yes. We'd recommend always confirming with an accountant though on this as they may recommend you keep them separate for reporting purposes.

Terms & ConditionsAccessibility statement