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      Guide to Recording Personally Paid Business Expenses in QuickBooks

      Exploring Techniques for Accurately Documenting Personally Paid Business Expenses in QuickBooks

      The below video explains how you can record your personally paid business expenses in QuickBooks. Following the video are step-by-step instructions. 

       

      NOTE: You have three options when recording owner-paid transactions. 

      Step 1: Understand Your Options When using personal cards for business transactions, it is advised not to connect these cards directly to QuickBooks. Instead, consider these three options for recording expenses:

      a. Record the expense as an owner's investment into the business.

      b. Record the expense and reimburse yourself later.

      c. Include the expense as a loan to the business.

      Step 2: Recording an Owner's Investment If you choose to view the expense as an investment into the business, follow these steps:

      1. Create an expense under the owner's name, for example, "John Doe owner".
      2. Enter the expense details such as "Accounting Fees: $500" and "Insurance: $250".
      3. Select "Owner's Investment" as the expense account and subtract the total expense amount from it. This will result in a zero-dollar net balance, meaning it will not impact your financial records while still tracking the expenses.

      Step 3: Recording an Expense to Pay Back Later If you intend to reimburse yourself later, proceed as follows:

      1. Like in Step 2, create an expense under the owner's name and enter the details.
      2. Depending on your preferred method of repayment, this could be marked as an expense for future reimbursement. You could write yourself a check or transfer money from the business account later.

      Step 4: Recording an Expense as a Loan The third option is to consider the personal expense as a loan to the business. To do this:

      1. Create an expense similar to the previous steps.
      2. Instead of deducting from "Owner's Investment", now add the amount to a "Loan" account. This will show a loan payable on your books.

      Step 5: Review Your Records To understand how these transactions impact your financial reporting:

      1. Go to your Profit and Loss statement, where you'll see all the recorded expenses.
      2. Then, check your balance sheet. Here, you'll see the loan for the owner and the owner's investment reflecting the amounts you've entered.

      Each of these methods serves a specific need in handling personally paid business expenses. They each offer different ways to accurately track and manage such expenses without negatively impacting your business's financial records.