RE: How to pay for personal expenses from a business credit card or bank account in QuickBooks Online?
I am a sole proprietor. I occasionally make personal purchases with the business credit card. I pay the business credit card with the business checking account. How do I categorize the personal purchase? Should I exclude the personal transaction? I just set up an owner’s equity draw account. Do I add it to owners draw account or transfer it to owners draw account? Is there a difference between adding it or transferring it?
For a successful business the owner or the decision maker should have thumb rules to follow. The most important and essential rule is to not Mixing up Business with Personal tasks or spending.
If an owner does the Personal purchases with the Business Card then he might face the loss in business.
To avoid this one should keep the Personal spending separate from Business expenses.
However, there are situations where you might need to utilize funds from your business accounts or credit cards.
Let’s understand How it works!
Whenever the owner pays for personal expenses using business accounts or funds, one should first record the personal expense using the company’s account and then reimburse the company.
Now the steps below will guide you to create the personal expenses using existing company account:
- Go to the (+) on the Right-hand top.
- Under Vendors select
- Now under Check Window go to Payee drop down to Select the Payee Name.
- Now fill in details like Bank Account, Cash Account or Credit account through which you did the purchase.
- Under Category details section, from the drop down select Account name Owner’s Equity or Partner’s Equity.
- Now enter the Amount of the purchase.
- Last step is to Click on Save and close.
As I mentioned above the expense you just created need to be reimburse as well, the steps below will Guide you for same:
- Go to the (+) on the Toolbar.
- Under Another click on Bank Deposit.
- Select the Account from the drop down to which you want to add the Reimbursement, and the Date.
- Under Add funds to this deposit section, enter the same account name as Partner’s Equity or Owner’s Equity in the Account column.
- You may Add the additional information related to the transaction in the Memo field.
Now Click on Save and close or Save and new.
