Navigating QuickBooks Online: Adding Personal Expenses to Your Business Books

Smart Solutions: Seamlessly Integrating Personal Expenses into Your Business Books with QuickBooks Online

Welcome to The Smart Bookkeepers' guide to smarter bookkeeping for smarter businesses. Today, our expert Martin shares a straightforward and efficient solution for a common bookkeeping challenge faced by new businesses and startups - adding personal expenses into your business books in QuickBooks Online.

**The Challenge:**

Often, new business owners purchase essential items for their business using personal funds or credit cards. The dilemma then arises: how do you accurately reflect these expenses in your business's financial records?

**The Solution:**

Here's a step-by-step guide to handling this situation within QuickBooks Online:

1. **Setting Up a Pass-Through Account:**
   - Navigate to the 'Expense' section by clicking on 'New'.
   - Use a business expense, like purchasing a desk from Amazon with a personal credit card, as an example.
   - Create a new payment account named 'Cash Control Account', which will function as a pass-through account, zeroing out after each transaction.

2. **Recording the Expense:**
   - Enter the transaction date and select the appropriate expense category (e.g., 'Office Expenses').
   - Add the cost of the expense (e.g., $850 for a desk).

3. **Reflecting Owner's Investment:**
   - To indicate that this expense was paid using personal funds, create an entry under the 'Owner's Investment' category.
   - This should be an equity account shown on the balance sheet.
   - Record the same amount as the expense but as a negative figure, to zero out the transaction.

4. **Adding Important Details:**
   - Attach the purchase receipt to the transaction for record-keeping and future reference.
   - Include notes specifying that the purchase was made with personal funds (e.g., 'Bought desk with personal AMEX').

5. **Reviewing the Transaction:**
   - Save the transaction and review how it reflects in your reports.
   - On the Profit and Loss report, the expense will appear under the relevant category.
   - On the Balance Sheet, the amount will show up under 'Owner's Investment', indicating the owner's personal contribution to the business for that expense.

**Conclusion:**

This quick workaround ensures that your business expenses paid with personal funds are accurately recorded in QuickBooks Online. It's essential to keep personal and business finances separate, but with this method, you can easily integrate necessary personal expenses into your business books.

For any questions or more complex transaction issues, feel free to reach out to us at The Smart Bookkeepers. We're here to make your bookkeeping journey as smooth and efficient as possible.