Handling business expenses with a personal bank account

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:

  1. Click into your Personal profile, and head to Purchases > Receipts. Upload the receipt for the expense. 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.
  2. Head over to Accounting > Transactions page and change the category of the receipt transaction to 'Owner Investment/Drawings'
  3. Now, click into your Business profile. Head to Accounting > Transactions > More (top right corner) to add a journal transaction.
  4. Create a journal transaction with three lines. Debit the appropriate expense account for the amount of the purchase before tax. Debit the appropriate Sales Tax Receivable account by the amount of sales tax applied. Credit 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. 

  1. Click into your Personal profile, and head to Purchases > Receipts. Upload the receipt for the expense. 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.
  2. Head over to Accounting > Transactions page and change the category of the receipt transaction to 'Owner Investment/Drawings'
  3. Now, click into your Business profile. Head to Accounting > Transactions > Add an Expense
  4. Under Account, choose Owner Investment/Drawings. Under Amount, enter the same amount as the transaction created in Personal. Under Category, choose the appropriate expense account. Add sales tax if applicable.

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 listed in your transactions that you consider personal expenses, click the grey arrow to the right of the transaction and select Move to Personal

  1. For any expenses listed in your transactions that you consider personal expenses, change the category of the transaction to Owner Investment/Drawings, leaving the account as is.
  2. Make note of the transaction amount and head over to your Personal profile. Add a transaction with the account set to Owner Investment/Drawings, the amount the same as the transaction created from business, and the category set to the appropriate expense account. Add sales tax if applicable.

The expenses will now be reflected on your books as personal and will not contribute to your business expenses.

To make your bookkeeping and reconciliation as simple as possible, we recommend having a separate business bank account for your business transactions. This doesn’t have to be an account that your bank calls “business banking” or something similar, it just needs to give your business transactions their own home.

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