It’s a good idea to keep your business and personal finances separate, but every once in a while you might happen to make a business purchase with a personal bank account. If you need to account for a business expense that was paid from your personal bank account, or if your business and personal expenses share a single bank account, here's how to handle it.
To account for business expenses paid from a personal bank account:
- Upload the receipt for the expense to your Personal profile. Categorize it as you normally would, make the account your personal bank account, and click Verify. This will create an expense transaction in the Transactions page.
- Head over to the Transactions page and change the category of the created transaction to Owner Investment/Drawings
- Next, create a journal transaction that debits the appropriate expense account by the purchase amount before tax, debits the appropriate sales tax account by the amount of sales tax, and credits Owner Investment/Drawings by the total amount of the expense.
Depending on where you do business, you may not have to record recoverable taxes on purchases. If this is the case for your business, then the journal transaction above can be simplified to a two-line journal transaction that debits the appropriate expense account by the total amount of the purchase, and credits Owner Investment/Drawings by the same amount.
The expense is now accounted for accurately and reflected in your personal and business profiles.
If you use a single bank account for personal and business transactions:
For any expenses in your business transactions that you consider personal, click on the grey arrow to the right of the transaction and select Move to Personal.
If you do not see the option to move to personal, then you can account for the expense using the instructions below:
- Change the category of the transaction in your business profile to Owner Investment/Drawings, leaving the account as is.
- Make a note of the transaction amount and head over to your Personal profile. Add a journal transaction that debits the appropriate expense account and credits Owner Investment/Drawings
The expenses will now be reflected on your books as personal,and not contribute to your business expenses
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