If You Mix Up Personal And Business Expenses In QuickBooks Online
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- čas přidán 17. 09. 2019
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Index
0:28 Two ways of how it happens
1:23 Seth has come up with a system that will help you separate the expenses
1:50 Set up a chart of accounts as Expense Reports
2:34 Create the audit trail in case you need to trace the document back
3:08 A cool trick according to Seth
3:31 Download a CSV transaction file and add them into a table
5:13 Cut down to just the business expenses to avoid commingling
5:34 Turn the numbers on the spreadsheets as negatives
7:00 Uploading transactions in the banking area in QBO
8:21 Fast way to sort the transactions and getting them inside QBO
8:56 Going through transactions to categorize
11:12 Run a balance sheet to view the expense report total
11:30 Write a check to reimburse the expense report
12:36 We pay something by accident through business cc for personal, how to fix it
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Thank you so much. I especially liked explaining co-mingling and how to avoid it - behave as an employee to be reimbursed after using a personal credit card to cover company expenses.
Thank you George! I am so glad this was helpful.
Amazing! Thank you for this video. Excited to comb through the rest of your content.
This is AWESOME Seth! Thank you so much!
Thank you!!!
Seth, you saved me so much time. You explained everything so clearly. Thanks so much!
Thank you Dallin!
Thank you so much! this was so helpful!
So glad it helped!
This video was truly on point. Even down to the tip on the use of tables! Thanks for giving such a clear and concise explanation of dealing with personal & business finances in qbo. I really like your videos. I watched a property management (for others) video you did & it was extremely helpful as well. Thanks so much for your expertise!
Thank you Monifa! If you want to stay up to date with everything I'm doing you can subscribe to my emails on my website.
This was a great thoroughly explained video. I've always struggled with how best to handle this!
Thank you so much! Comments like these make our day!
Wow this was 100% exactly what I needed.
I can't hire good bookkeeping after trying for months so I'm learning myself and this just explained how to accomplish my task in very short amount of time!
So happy this helped!
Amazing. Thank you!
Thank you Laura!
Thank you
Hello, I love ed your video. I like the first version of entering right now. Getting ready for tax time. Would you say it is better to just create a category with my name like you did in the first example, even though I have my amex and personal cards tied to my expenses?
Thanks. Well done. Very informative and creative. I think you could also set up the EE as a vendor and then pay off that vendor as the expenses incurred are paid.
Yes, once the time comes to pay the owner, or the employee that's exactly how you would do it.
Such a great video, thanks.
If i paid with personal credit card for a purchase that is 80% for business expense, how would I indicate the % for partner distribution? Would I put split on both John Wick expense and also the reimbursement?
What is the best way to run a charge through that is half business? use a business card or a personal card?
1. Payments on the card statment are ignored, but money leaving the LLC to pay the card would be a DR expense report liability and CR cash?
2. Personal charges on the card are ignored.
3. Can the card charges be owner equity instead of liability?
You are so awesome!! I just spent a waste so two jokes to get this information
Amazing Cassandra! I am so glad this helped!
I'm curious how "jokes" got you to this information? Who said accounting can't be fun? Or even funny?
Hi Seth,
Thank you for all of the so informative videos! So many questions answered! 😀
One question I have after watching this video: I previously watched the video "QuickBooks Online Tutorial - How to Record Loans From One Company to Another." Then, watching this video brought up the question, when would I use one over the other?
The scenario I am working with does not involve the owner using company funds directly for covering personal expenses, but there is a lot of scenarios where the owner takes loans in his name and on his personal credit, then deposits the full loan amount into one or the other of his companies, or he will use his Citibank Anywhere Visa (Costco - lots of rewards to be had!) for company expenses and then repay the Visa card directly from company funds, as an expense. In my mind the methods used in the aforementioned video are more applicable than the one used in this video, to this scenario. Am I correct in my thinking?
Hey sorry for the delay here!
If the owner gets a personal loan, and then deposits that money into his business there are two loans now.
One between the owner personally and the bank.
And the other between the owner and their business.
"...he will use his Citibank Anywhere Visa (Costco - lots of rewards to be had!) for company expenses and then repay the Visa card directly from company funds, as an expense."
- this is the one where you would use the scenario described in this video.
Intercompany loans are loans between two companies (both belonging to the same owner). That's what the other video you referenced is for.
Hey, awesome video! Here’s my situation:
I currently have a personal credit card and checking account that I use for personal and business use (sole proprietor). I connected both of those accounts to automatically import into QB, and now I have a massive number of personal transactions running into QB. I have more personal transactions than business transactions. This is my first year as a business and only using QB for a short while also.
I feel that your method of only manually uploading business expenses is much easier than sorting through the entire auto imported list. So my questions to you are, should I remove the bank account and credit card from auto import and wipe the history before I use your method? I’m afraid it will create double entries if I don’t, and I have 100s of entries to categorize as personal that may be a waste of time. Thoughts?
Hi! Yes. I would remove everything, and then do it according to this method. It will be MUCH cleaner that way.
Holy smokes - this is so helpful! If an S-corp single owner doesn't reimburse the business for personal charges, should I tell him that he must? He pays himself a weekly salary, though. Thanks, Seth!
Thank you!
I wouldn't say he "must." You can always call it a distribution, but it would be a lot cleaner if he did!
This video should have 100k views. What a clean workflow - Thank you!! Saved me hours $$ and headache.
Let me buy you a coffee in LA sometime as a token of thanks - saw that Burbank Portos charge 😆
Thank you Grant! The video is only a little more than a month old, so maybe in time it will get the views. Let me know when you'll be in the area. I am at Portos just about every Friday picking up dinner for my wife and I. Meanwhile PLEASE share this video!!!!
When itemizing each expense should the taxes be collected?
Taxes? In this video we're dealing with business expenses paid with personal means (and vice versa). Taxes don't really figure in here unless you paid for (eg) inventory for resale and paid taxes. Then you would want to track that as a credit against taxes collected later.
Hi Seth, thanks so much. One question if I may ...
If these transactions are imported from a personal bank source into QB using a 'credit card' type expense report account as you showed ...
Does it mean that there's no need to allocate the expense as a minus figure (-) to an 'Owner's Investment' account like the official QB training vid demonstrates (in the UK); and as you showed, all that's required is to allocate the expense to its relevant account from the expense report account you set up?
Thanks in advance if you see this ;-)
Hi Koo!
(that reminds me of a poem). Sorry bad joke I'm sure you've heard it!
This is a little different process. By importing these as though they were credit card expenses you are creating a liability on the books based on what the business owes to the business owner. We're treating it like an expense report submitted by the owner to get reimbursed. So we are not going to touch the Owner's Investment account. The only exception would be if the owner says they don't want to be reimbursed. Then you can enter a credit card credit for the balance and THAT's when you would use the Owner's Investment account, but as a positive number, not a negative.
@@nerdenterprises Thanks so much Seth, really appreciate your reply. The real joke is that my accountant has his feet up with an evening beer by now ... whereas I'm sweating over QBs and reaching out to you! ;-( ... thanks ever so much for taking the time
LOL share that with your accountant along with the link to my video and say you're thinking about hiring "this guy" to help you. That should get them back up on their feet 🤣🤣🤣.
I have a client that has his Gym Membership automatic payments associated to his biz account. I have a bank feed rule set up that when it sees that transaction, it will automatically code the monthly membership fee to an Owner Distribution. This client is an LLC so to my knowledge, multiple Owner Distribution transactions such as this are not a big problem. Your thoughts?
If it's a single member LLC then it doesn't matter. If there are two or more members this can be a problem, especially if the LLC files as an S-Corp.
Could you set the account as a checking account instead of credit card? Any benefit to making the account a credit card account?
The main difference is that a bank account is an "Asset" and as the video shows, treating this like an expense report, you want this set up as a liability.
Logistically it will work as a bank account, but you will probably have a negative balance in it, because you'll be recording expenses in it, and then you'll zero it out by recording an expense from your actual bank account, and recording that as a payment to this one.
For personal expenses paid with s business why not just use a owners draw account?
You can, but from an Audit standpoint, and especially for legal entities like S-Corps this approach is MUCH cleaner.
Can I just add an expense and add the receipts in it with out an especific Payee and attached all the recepts in it?
You can, but if these are personal expenses and you're deducting them as business expenses that's going to be a problem.
You can record them as distributions like most people do.
This method is just cleaner - more Bulletproof.
I’ve used the person credit card method for decades. I feel super smart. 😂
Sounds like you ARE super smart! 🤓🤓🤓
@@nerdenterprises I'll take it!
Question. If I’m taxed as an S Corp. Can I make personal payments and just mark them as distributions on my books?
It's very common for S Corp shareholders to take distributions to pay their personal taxes, so yes. But I would be careful about other kinds of payments. If it starts to look like you're using your S Corp as your own personal cash register that could get you into trouble.
@@nerdenterprises got you. I always categorize anything that is personal as a distribution to myself as a shareholder.
I added my personal credit cards into my business accounts and only record business expenses. But then couldn't reconcile the statements because I haven't included personal use (I was only interested in recording business expenses). So I forced the reconciliation to match the statement end amount (to end with a zero balance on my balance sheet because the business does't owe any balance). Now have a remaining figure that I think should go under owner equity? I realize I probably shouldn't have listed my personal credit cards in the accounts and instead showed the expenses paid with owner investment?
Hi! I'm assuming from this that you aren't going to make the payment to the credit card from the business.
If so then all you have to do is zero out the balance in the credit card by added a Credit Card Credit for the amount, and book that to the Owner Contributions (Equity) account because it is as if the owner contributed money into the business by paying it's expenses with personal means.
Then you can reconcile the CC account with a $0.00 ending balance.
@@nerdenterprises I almost have the same question as this and you just answered it right here. But I did a different approach and can you please let me know if this is valid?
-I also linked my personal bank and credit card to QBO at first because this was my first means of transaction before I finally got my business bank account.
-I categorized all transactions for business into my books and excluded everything personal, the problem is my bank balance and quickbooks doesn't match. So to negate this problem I summed up all my personal expenses and personal payments and added that to the account's opening balance and now they match. Does this make it valid? It's still under equity the same as your example only as "Opening Balance Equity"
What if I was starting the business and don't intend to do reimbursement? It was more of an series of owners contributions?
Yes. That's not so much mixing up personal and business. It's more along the lines of what and how you should do it. If the owner contributes cash to the business to get or keep it going, you can absolutely record that as contributions (Equity).
good video.
how about partial business expenses such as Business Meals (50%), Cell Phone (30% - 40%), etc?
how do you record them on QBO, should you split them for Cell Phone, then Owner's Draw?
Business meals you record the full amount, and there is an adjustment that is made on the tax return for the 50%. Anything else, you can split the transaction between the business portion and the personal. Best way is to pay it from personal funds, and then reimburse yourself for the business portion from your business.
Nerd Enterprises, Inc. thanks for the reply, but I am using the AMEX business Platinum because Of all the credits and benefits, especially the cell phone credits. What I’m currently doing is just making a journal entry and crediting 60% (40% business use) and debiting owner’s draw; but I am not sure if it’s actually correct.
For the personal card used in my LLC im going to do the following:
1. Create a liability account to me: "Liability - expense report"
2. Business charges to the card DR expense CR expense report
3. Personal charges/refunds posted to the card will be ignored
5. Payments posted to the card (from me or the llc) will be ignored
4. Cashback redemptions posted to the card will CR expense DR expense report
5. Money leaving the LLC bank to pay the card will be DR expense report CR cash
This is my plan instead of treating the charges as equity. Thoughts?
If you follow the video, the whole idea is that you want to set up the account as a credit card account type. This makes it easy to record just the business related transactions. You can export your transactions from your credit card to a csv (Excel) file. Then you can remove anything that isn't business, then import the remaining transactions as shown in the video.
Then you can either reimburse the balance, or record an entry moving the balance to Equity (Contributions).
What if I simply catergorized everything personal as a owner withdraw?
That's what many people do. This method is a little cleaner, keeping it out of the Equity section makes it look less like co-mingling and more like an expense report.
How do i do it for Desktop Version PLease help
You won't be able to do the import the same way in Desktop. SaasAnt has a desktop version you can use for that part. The rest would work exactly the same way.
I want to reimburse owner but not by check. How can we do this?
You can pay them any way you like - ACH?
There are apps like Relay Financial and Routable that you can connect to QuickBooks and schedule the payments with.
....or just use Classes (Personal & Business)...
If you have an S-Corp (or any legal entity) and you do that, you can lose the protection of your personal assets that having an entity offers.