personal credit card used for expenses for a sole proprietorship


A

Art Prest

I recently became a consultant and am using QB 2004 set up as a sole
proprietorship. I have set up a new credit card and a checking account
strictly for use of the sole proprietorship. However I have some expenses
that I charged to my personal credit card. How do I record theses expenses
and get reimbursement from the sole proprietorship? I have read that I
should post the expenses as an increase in owner's equity. If this is
correct what else needs to be done so that I can be reimbursed?
Thanks, Art
 
F

Frank

Hi,
I'll sometimes charge a business expense to my personal checking account
using my debit card. I setup an account in QB named "Personal Checking", and
then when I charge business related stuff to it I record it to that account,
and when I charge something personal I don't record it in QB. I keep my
personal checking register separate, outside of QB, and I don't care what QB
says by personal checking balance is. This is probably not the way an
accountant would do it, but it seems to work fine for me.
 
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?

!

Frank, I'm an accountant and that's mostly the way I do it. Assuming
that your "Personal Checking" is a "Bank" account, it will be in
"overdraft" following your method. You can periodically reimburse
yourself from the business bank account, or transfer the "overdraft"
to Equity at year-end.


Frank said:
Hi,
I'll sometimes charge a business expense to my personal checking account
using my debit card. I setup an account in QB named "Personal Checking", and
then when I charge business related stuff to it I record it to that account,
and when I charge something personal I don't record it in QB. I keep my
personal checking register separate, outside of QB, and I don't care what QB
says by personal checking balance is. This is probably not the way an
accountant would do it, but it seems to work fine for me.
 
S

Steven Latus

Art said:
I recently became a consultant and am using QB 2004 set up as a sole
proprietorship. I have set up a new credit card and a checking account
strictly for use of the sole proprietorship. However I have some expenses
that I charged to my personal credit card. How do I record theses expenses
and get reimbursement from the sole proprietorship? I have read that I
should post the expenses as an increase in owner's equity. If this is
correct what else needs to be done so that I can be reimbursed?
Thanks, Art
1. You could write yourself a check from your business checking account
as reimbursement for the expenses and charge the appropriate expense
accounts. This is the simplest method.

2. You could record the expenses by a general journal entry - debit the
appropriate expense accounts and credit the appropriate equity account
(draw, owner's equity, owner's contribution, whatever). Then when you
write the reimbursement check, charge the same equity account that you
used for the journal entry. This method involves an extra step, but will
serve to record the expenses immediately if you wish to postpone the
reimbursement to a later time. This method is useful at year's end if
you want to record the expenses in the proper year, but do not have the
cash available to get reimbursed before the end of the year.

Steve
 
A

Art Prest

I set up a new vendor - "My Name - Petty Cash Reimbursement". I then posted
each purchase on my personal credit card to this account and charged each
one to an appropriate expense account. I then cut a check to reimburse
myself for those expenses.

Art
 
M

Mike Block - QuickBooks Tax Cut C.P.A.

I recently became a consultant and am using QB 2004 set up as a sole
proprietorship. I have set up a new credit card and a checking account
strictly for use of the sole proprietorship. However I have some
expenses
that I charged to my personal credit card. How do I record theses
expenses
and get reimbursement from the sole proprietorship? I have read that I
should post the expenses as an increase in owner's equity. If this is
correct what else needs to be done so that I can be reimbursed?

Thanks, Art


Yes, you can adjust it through Owner's Equity. The Journal Entry for
recording expenses will be debit Expenses Account and credit Owner's
Equity Account. For reimbursement write a check for your name from the
checking account of sole proprietorship. Entry will be debiting
Owner's Equity: Draws Account and crediting Bank Account.


Mike Block - QuickBooks Tax Cut C.P.A.
Intuit paid me to make QuickBooks better!
http://www.blocktax.com/
http://www.quickbooks-add-ons.com/
 
S

S.M. Serba

If the OP is dealing with sales taxes, especially in Canada, the general
journal entry will cause problems when the taxes collected, less any input
tax credits, have to be remitted to the appropriate level of government. To
the best of my knowledge, Intwit has not corrected this in the Canadian
version. Specifically
if not posted using the Sales or Purchases module, the program ignores any
taxes paid or collected...


--
Stephanie Serba, AICIA
Partner, Durham Business Outsource
Accounting & Technology
smserba <at> dbo <dot> ca
www.dbo.ca
 
?

!

No, this GST issue is corrected in 2004 and 2005. The Journal Entry
allows you to choose whether the GST amount will be on lines 103/105
or 106/108 of the GST return.
 
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S

S.M. Serba

Excellent. I had not heard about that (obviously). They really didn't make a
big deal out of fixing what in my opinion was a GRIEVOUS error with the
software.


--
Stephanie Serba, AICIA
Partner, Durham Business Outsource
Accounting & Technology
smserba <at> dbo <dot> ca
www.dbo.ca
 

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