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Handle mixed business and personal funds

In general, it isn't a good idea to mix business and personal funds in your QuickBooks Desktop company file. It can create a tax-time nightmare to sort everything out. The IRS recommends opening business-only banking accounts for any new business. In QuickBooks Desktop, make your checking and credit card accounts business-only accounts.

However, even when you do maintain separate business and personal banking accounts, you may occasionally need to pay for business expenses out of your own pocket. When this happens, you need to record the transaction in QuickBooks Desktop to correctly account for the expense.

Important: These procedures apply only to personal expenses incurred by owners or partners. Reimbursing an employee is handled differently in QuickBooks.

Detailed instructions
An owner or partner paid for:
 
Business expenses with personal funds
  1. Go to the Lists > Chart of Accounts
  2. Double-click your owner's equity account to open the account register
  3. In the Increase column, enter the amount that was spent, then press Tab
    • If personal items were bought in the same transaction, do not enter those items or amounts. They are not relevant to your company's books
  4. In the Account drop-down list, select the appropriate expense account
    • If the amount you're entering is for more than one expense account and/or is reimbursable by one of your customers, click Splits at the bottom of the register. In the Splits window, associate the appropriate amount to each account, click the Customer:Job drop-down list, and then click the customer and job name
  5. Click Record
  6. To reimburse yourself (the owner or partner), record an owner's draw in your owner's equity account
    • To record an owner's draw, go to the Banking > Write Checks
    • In the Write Checks window, make the check out to the owner
    • In the detail area of the check, assign the amount of the check to the equity account that you use to record the owner's draws
    • Save the check
       
Personal expenses from a business checking or credit card account
  1. Go to the Banking menu and click Write Checks or Enter Credit Card Charges, depending on how the payment was made
  2. Click the Bank Account drop-down list and choose the appropriate checking or credit card account
  3. In the Pay to the Order of field, enter the name of the payee or vendor
  4. Enter the amount that was spent
  5. Click the Expenses tab
  6. Click the Account drop-down list and choose your owner's equity account
  7. (Optional) Enter a memo
  8. Save the transaction
  9. To reimburse the company, record a capital investment in your owner's equity account
    • Go to the Banking > Make Deposits
    • If the Payments to Deposit window opens, choose one of the following options:
      • Select the payments that you want to deposit along with your investment check, and then click OK
      • Click Cancel to deposit only the investment check
    • In the Make Deposits window, choose the bank account into which you're depositing the money
    • In the detail area, enter the name of the person from whom you received the money and enter the amount of the investment
    • Click the From account drop-down list and choose the appropriate equity account
    • Save the transaction

 

Personal expenses out of petty cash
    • Go to the Lists > Chart of Accounts
    • Double-click your petty cash account to open the account register
    • In the Payment column, enter the amount that was spent for personal use. Press the Tab key to move to the next line
    • Click the Account drop-down list and choose your owner's equity account
    • (Optional) Enter a memo
    • Click Record
KB ID# HOW12956
12/10/2016 10:27:43 AM
QYPPRDQBKSWS08 9138 Pro 2017 7901e9