Recording business expenses paid from personal credit card

Discussion in 'Quickbooks' started by James, Aug 24, 2007.

  1. James

    James Guest

    How do you record purchases made from a personal credit card?

    I have a sole proprietorship.

    Sometimes my wife will order things for the business - furniture,
    office supplies, etc on a personal credit card. In the past, before
    using a business credit card, I ordered two computers from a personal
    credit card.

    How do I enter these items? I want to get them into quickbooks for
    tax writoffs.

    I need a catch-all account to somehow represent "business purchases
    made with personal credit card"

    Should I just make up a fictional credit card, then enter all the
    items in there, using the credit card transactions?
     
    James, Aug 24, 2007
    #1
    1. Advertisements

  2. James

    Laura Guest

    "James" <> wrote in message
    news:...
    > How do you record purchases made from a personal credit card?
    >
    > I have a sole proprietorship.
    >
    > Sometimes my wife will order things for the business - furniture,
    > office supplies, etc on a personal credit card. In the past, before
    > using a business credit card, I ordered two computers from a personal
    > credit card.
    >
    > How do I enter these items? I want to get them into quickbooks for
    > tax writoffs.
    >
    > I need a catch-all account to somehow represent "business purchases
    > made with personal credit card"
    >
    > Should I just make up a fictional credit card, then enter all the
    > items in there, using the credit card transactions?


    Set up the credit card account. Post any legit business expenditure to the
    appropriate expense account. Set up an equity account called "Owner's Draw"
    and use that account to post all personal expenditures. This would be used
    for ANY personal expense paid out of the business account.

    Just make sure you have good documentation for all of your business
    expenditures in the event of an audit. It would be best if you could keep
    your business and personal credit cards and checking accounts separate.
     
    Laura, Aug 24, 2007
    #2
    1. Advertisements

  3. James

    James Guest

    Laura,

    Thank you very much.

    So you're saying I should enter the personal credit card account into
    Quickbooks, right?

    Then should I just enter those few transactions that were for the
    business, and then pay those expenses with "Owner's Draw".

    I hope that makes sense. I don't want to enter 1,000 personal credit
    card items just because I have 10 of those items that are business
    expenses.

    Thanks for the tips!
     
    James, Aug 24, 2007
    #3
  4. James

    Laura Guest

    "James" <> wrote in message
    news:...
    > Laura,
    >
    > Thank you very much.
    >
    > So you're saying I should enter the personal credit card account into
    > Quickbooks, right?
    >
    > Then should I just enter those few transactions that were for the
    > business, and then pay those expenses with "Owner's Draw".
    >
    > I hope that makes sense. I don't want to enter 1,000 personal credit
    > card items just because I have 10 of those items that are business
    > expenses.
    >
    > Thanks for the tips!


    If the majority of the charges are personal then don't create the credit
    card account. Treat that credit card as your personal account. Pay the
    credit card balance using your personal funds to keep things straight.

    Instead, create an equity account called Owner Contributions to use instead
    of the cash account when posting these entries.

    You can use JE to Debit {appropriate expense} Credit Owner's Contributions.

    If you reimburse yourself for those business expenses write yourself a check
    that Debits Owner Contributions.

    As you can see it would be best if you dedicated a credit card for your
    business expenses. It makes the bookkeeping easier and less chance of being
    accused of comingling funds.
     
    Laura, Aug 24, 2007
    #4
  5. James

    Bill January Guest

    What works well is to enter in my petty cash account such business items
    paid for by cash or by my personal credit card or by check on my personal
    checking account. My petty cash account is set up as a "checking" type
    account in QuickBooks.

    Bill January, Houston, Texas


    "James" <> wrote in message
    news:...
    > Laura,
    >
    > Thank you very much.
    >
    > So you're saying I should enter the personal credit card account into
    > Quickbooks, right?
    >
    > Then should I just enter those few transactions that were for the
    > business, and then pay those expenses with "Owner's Draw".
    >
    > I hope that makes sense. I don't want to enter 1,000 personal credit
    > card items just because I have 10 of those items that are business
    > expenses.
    >
    > Thanks for the tips!
    >
     
    Bill January, Aug 24, 2007
    #5
  6. James

    Laura Guest

    A petty cash account really should only be used for cash held in a drawer.
    You need to be able to physically count the money periodically to reconcile
    the account. Using the account for your personal credit card should not be
    used. Use Owner's Contribution instead.

    --
    ~Laura~


    "Bill January" <> wrote in message
    news:%1Hzi.6597$...
    > What works well is to enter in my petty cash account such business items
    > paid for by cash or by my personal credit card or by check on my personal
    > checking account. My petty cash account is set up as a "checking" type
    > account in QuickBooks.
    >
    > Bill January, Houston, Texas
    >
    >
    > "James" <> wrote in message
    > news:...
    >> Laura,
    >>
    >> Thank you very much.
    >>
    >> So you're saying I should enter the personal credit card account into
    >> Quickbooks, right?
    >>
    >> Then should I just enter those few transactions that were for the
    >> business, and then pay those expenses with "Owner's Draw".
    >>
    >> I hope that makes sense. I don't want to enter 1,000 personal credit
    >> card items just because I have 10 of those items that are business
    >> expenses.
    >>
    >> Thanks for the tips!
    >>

    >
    >
     
    Laura, Aug 24, 2007
    #6
  7. James

    James Guest

    Laura,

    Where would I actually enter these charges, if not in the "credit
    card" section. Do I just create a "Owner Contribution", and then use
    the register to input the charges?

    Thanks!
     
    James, Aug 26, 2007
    #7
  8. James

    Laura Guest

    "James" <> wrote in message
    news:...
    > Laura,
    >
    > Where would I actually enter these charges, if not in the "credit
    > card" section. Do I just create a "Owner Contribution", and then use
    > the register to input the charges?
    >
    > Thanks!


    You need to create the Owner Contribution account in the equity section of
    the COA. Create an Owner's Draw account (equity) if there isn't one already.
    Since these are not bank type accounts entering the transactions in the
    register is the way to go. The normal QB screens that require a "bank"
    account (deposits, payments) won't allow you to specify an equity account as
    your source of money.
     
    Laura, Aug 26, 2007
    #8
  9. James

    James Guest

    Thanks Laura. That makes sense.

    But what is the COA section?

    (This is why I am an engineer, not an accountant...)

    -James
     
    James, Aug 26, 2007
    #9
  10. James

    James Guest

    Pardon me while I answer my own question. I think you mean "Chart of
    Accounts".

    Thanks for the tips!

    Could repay the favor with some mechanical engineering questions if
    you had any : )

    -James
     
    James, Aug 26, 2007
    #10
  11. James

    Laura Guest

    "James" <> wrote in message
    news:...
    > Pardon me while I answer my own question. I think you mean "Chart of
    > Accounts".
    >
    > Thanks for the tips!
    >
    > Could repay the favor with some mechanical engineering questions if
    > you had any : )


    you are welcome.

    Yes. COA=Chart of Accounts. Sorry for the abbreviations.
     
    Laura, Aug 27, 2007
    #11
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. ForDiscuss
    Replies:
    1
    Views:
    436
    Harlan Lunsford
    Dec 15, 2003
  2. Replies:
    8
    Views:
    1,853
    S.M.Serba
    Aug 4, 2005
  3. Bgreer5050
    Replies:
    5
    Views:
    398
    HeyBub
    Aug 14, 2005
  4. DatabaseDude

    Recording expenses that were paid for with personal funds

    DatabaseDude, Jan 19, 2008, in forum: Microsoft Accounting
    Replies:
    2
    Views:
    466
    tomfr
    Jan 26, 2008
  5. Pete Lavelle

    Business and Personal expenses on same credit card

    Pete Lavelle, Nov 3, 2004, in forum: Microsoft Money
    Replies:
    1
    Views:
    394
    Cal Learner-- MVP
    Nov 3, 2004
Loading...

Share This Page