Payment of Owner's Expenses

by Incognito

How do I set up an account to reimburse owner for

expenses paid?




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I talk about how I like to setup my "Owed To Owner" account in QuickBooks (QB) in my article titled Creating An Audit Trail. Follow the link to find out what to do.

My personal preference is to use the credit card type of QB account rather than the current liability type of QB account.

Things to remember when recording "Owed To Owner" expenses:

  • When setting up the owner in the name list, select Other as the type, not Vendor.

  • Itemize each expense item to the respective account. Do not total and enter the expenses as one lump sum.

  • When reimbursing the owner, make sure to code the cheque to the "Owed To Owner" account ... and the cheque should be payable to the owner ... not cash.



If the owner is making a loan to the company OR making an investment in the company (there is no expectation of being paid back), the transactions are just a bit different than when reimbursing the owner for out-of-pocket expenses.

Whenever possible, the owner should try to pay for business expenses using a business credit card or writing a cheque to the vendor from the business account. I talk about the reasons why in my article Creating An Audit Trail.


I hope this answers your questions. If I haven't explained in enough detail how to setup the account, post back and I will walk you through screen by screen.

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Oct 25, 2013
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Opening Books Question-Recovery of Startup Costs
by: Lissa, Canada

Hello,

I am setting up QuickBooks for a friend who is opening a new small retail store. She won't officially open until next week, but over the past year she has incurred expenses for her new space, materials, equipment, etc. All of these expenses have been paid for via a credit card for the business. However, she won't have a bank account until this week.

I know how to record the credit card expenses properly, but my question is related to her credit card payments. She has paid the credit card using her personal bank account. How do I record these payments properly in her QuickBooks to reflect that this is a personal investment thus far until the store is making sales?

Any advice would be helpful. Thank you!



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Hey Lissa,

The above post on how I like to book business expenses paid with personal cash should help you out.

I also chat a bit about how to recover your ITC startup costs in my GST/HST Guide.

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