Business expenses paid via personal account
I am trying to set up a small company in quickbooks. The company has been in business for about 2 months.
When the company first started they had not set up a bank account for the business. Supplies were paid for through their personal bank account or by cash. How do I show those bills as paid without them going through the company bank account?
In order to record business expenses paid via personal accounts, it all depends on how the company is structured. Sole proprietors, partnerships, and corporations are all handled a little differently.
There are other ways, but here's how I would do it for each type. First I would collect all of the receipts. Then I would open the General Journal.
For all types, I would always debit the expense account for the expense, and use the date shown on the receipt. I assume no inventory was purchased. If inventory was purchased these instructions will not give accurate results.
In the Description area, I would enter the method of payment, and also the last four digits of the credit or debit card if one was used. If a paper check was used, I would include the check number.
For the credits...
For sole proprietors.... credit the Investment account. It's located in the Equity section. Create one if it's not already there.
For partnerships... credit each partner's investment account according to who paid what. If the investment accounts are not there, create them. They are Equity accounts.
For corporations, I suggest you credit a Shareholder Loan account. If you don't have a Shareholder Loan account, create one as an Other Current Liability (or Long Term Liability if the balance will remain there for over a year). If there is more than one shareholder, create subaccounts for each shareholder. Credit each according to who paid what.
I hope this helps you understand how business expenses paid via personal accounts are recorded. Let me know if this was helpful by posting a comment below. Thanks for writing.