How to fix personal charges with business funds...and vice-versa {QBO Tutorial}

Рет қаралды 16,198

Күн бұрын

We've all been in a situation where you might accidentally put a business expense on a personal card or the opposite. It happens! It's actually quite simple to fix this in your business books so that you have the RIGHT expenses recorded as business expenses.
In this video Hannah goes over how to record these expenses whether you are a single owner or have multi-member ownership.
0:00 Don't worry, it happens
1:08 Uber and Costco mishaps
2:35 Personal expense on business card
5:45 Paying the business back
7:09 Business expenses on personal
9:31 Saving receipts
11:30 Separate personal and business
To learn more about CFO services, go to: claracfo.com/cfo-services/
💲 Need an accounting system? We use Quickbooks Online with clients and recommend it as the best accounting system for small businesses. Sign up to get a discounted subscription for 12 months! claracfo.com/QBO
🙋‍♀‍Got Employees? Talk to ADP! They can help you if you are a small business owner or an accountant or advisor who works with small businesses. Learn more here: claracfo.com/adprun
💸Pay vendors any way they want and get paid faster! Accept credit cards without paying merchant fees! Melio is a fantastic payments solution for every small business! claracfo.com/melio
(As an affiliate or referral partner for these companies, I may earn rewards from qualifying purchases)
Hannah Smolinski is a #CPA and the Founder of Clara CFO Group. Find out more about Clara CFO Group at claracfo.com/
Disclaimer: This video is intended for educational purposes and
should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.
CODE: TLGOWB6DTITCOACB, UNWEQT5L0XT5IUWD

Пікірлер: 68

@soonerbrad44 Жыл бұрын

I love your videos. You explain things so clearly. I have done this many times before. Thank you

@DrPogosyan Жыл бұрын

Thank you for taking the time and explaining to us how to handle these types of situations

@ClaraCFO Жыл бұрын

Happy to help! This has come up in comments before, so I hope this helps people!

@belindamikel3045 Жыл бұрын

I love your videos and 100% believe you provide an outstanding service for business owners. In fact, with all previous videos I have never had a concern. With this one I do. Let me share why. I believe the mixing of personal expenses through the business accounts was a little too nonchalent. Your comment related to 'this happens' and showing to categorize these transactions - I fully support. But, the feeling I was left with was clearly - don't worry aboutta it at all!! We work diligently to help business owners understand how important it is to maintain separation of personal and business. Once in a rare while an error happens - you gave excellent examples! But, I feel many could walk away from this video believing - oh, thank God! I can mix and not worry about it - I just fix it! This completely ignores the problems that are in fact created. It ignores the fact that at tax time the 'fixes' often have not been made and therefore are not caught. It ignores the fact that if not corrected (and let's face it, biz owners are extremely busy and often have the best intentions but forget) financials will not be accurate. And, it could potentially make it much more challenging for an attorney to defend their personal assets if their business is sued. So, I LOVE the concept of this video - I simply feel it left it a bit too squishy without any concerns at all! Thank you, Hannah for everything you do so well for so many!! Your videos really are exceptional as I believe you are.

@JoeDeWitt71 Жыл бұрын

Yes, thank you so much! This was very helpful.

@ClaraCFO Жыл бұрын

Great! that's the goal!

@alonzolopez6264 Жыл бұрын

Thank You And showing examples that helps me out So Much. Your The Best God Bless YOU

@ClaraCFO Жыл бұрын

Thanks for being here!

@MarylandBuilderCrew 8 ай бұрын

very helpfull! thanks

@altafhusaen 3 ай бұрын

Thanks for making this video.

@ClaraCFO 3 ай бұрын

Thanks for watching!

@yinggao4885 Ай бұрын

Just had this question when I do CC transactions, so helpful for me!

@iampal858 4 ай бұрын

thanks for the video

@MrBrandoncal 7 ай бұрын

thank you!

@georgesmith9178 29 күн бұрын

Great video. I would have loved for you to have shown the last portion where you only explained that when the check to yourself transaction shows from your auto bank feed, you will then reflect that against the payable account (Amount due to Owner). I assume this would be another journal entry where you debit the business bank account with the amount of the check and credit the Amount due to Owner account.

@josephpapino 6 ай бұрын

Thanks so much for the video. In the example where I charged personal funds accidentally to my business credit card and I want to pay them back -- I followed what you are saying about marking them as Loan to Owner. But how do I classify the payment like I made a payment to that business card from my personal checking account to offset the cost, but what do I mark that 'payment' as/from? It shows as a payment on the same credit card but its a payment from my personal account so how would I classify that one? Please and THANK YOU!!

@briannalynnnewkirk Жыл бұрын

AMAZING! Your videos are so helpful! Can you please do a video for online content creators? For example- Can we write off clothes, hair/nail appointments, etc becasue it is my online appearanc? Can I write off a trip where I document a "how to stay fit on vacation?"

@vinitnarayan8443 Жыл бұрын

Thank you, Love from India 🎉

@ClaraCFO Жыл бұрын

hi from the US!

@brianmcclemens2802 Жыл бұрын

Blessed

@ClaraCFO Жыл бұрын

Thanks for being here Brian!

@sharonbk7310 9 ай бұрын

Hi Clara, thank you for this helpful video. absolutely love love love it. I have a question. If I made 3 different business-related changes on my personal credit card, let's say $10, $30, and another $10, I would add those 3 charges separately in QB in the journal entry with the receipt. The question is, can I make one payment to myself of $50 "Payable to the owner?" instead of doing this 3 separate times?

@johnnyeklof5013 3 ай бұрын

Thanks

@ClaraCFO 3 ай бұрын

Woah! Just saw this - thank you for your gift! Much appreciated!

@TammyOudeAlink 3 ай бұрын

This video is great and I love your clear explanation. I have one question. I followed what you said about categorizing the accidental charges as 'Current Assets' Account type, 'Loans To Officers' Detail Type. My problem is I don't know how to categorize the reimbursement payment that I made. Do I create a 'Current Liabilities' Account type, "Loan Payable' Detail Type ? Thanks so much for your help!!!!

@ariher26 29 күн бұрын

I have the same question. how do I record the reimbursement?

@katherinesarkozy4043 11 ай бұрын

Can you explain paying yourself categorization as owner in this (owners draw)

@Jake-hn8hl 3 ай бұрын

Awesome video, new subscriber. I've got a 2-person LLC where I've incurred a couple dozen personal expenses that I want to get onto the P&L, but at the same time mark as an Owner's contribution (with simplest personal tax impact which Im assuming is just a single Owner's Contribution). Is the simplest way first to create an Owner's Contribution as bank deposit, then the journal entry you described with Expenses as COGS with the offset to the new Payable to Owner, and then finally cut a check right back to myself coded to the Payables to Owner account? Any reason I couldn't do the same but use an Expense instead of a Journal entry? Thank you!

@EmilyMencken-yj9xw Ай бұрын

Great tutorial! Am I missing something? Can't I just write a check to the owner and split it against the appropriate expense categories? Is there a reason we need to set up a liability account? I guess if the amount is large and is going to be paid back over time?

@noelvisramirezaccounting Жыл бұрын

I think you can put it as a distribution

@gwenhansellhendry3615 3 ай бұрын

The journal entry comes into the checking register when you get paid back?

@burmajobononno3238 6 ай бұрын

In this video how to fix personal charges with Biz funds, you taught us how to categorize that but did not go into recording the officer paying it back. Please advise.

@chocolatieree Жыл бұрын

So helpful and love your videos! Thinking dow the road, for an employee expensing something to be paid back, would this follow the same logic as listing under "Other Current Liabilities" but name it something like "Payable to Employee"?

@ClaraCFO Жыл бұрын

Yes, theoretically. Do you use some kind of expense report management system like expensify or dext?

@chocolatieree Жыл бұрын

@@ClaraCFO I'm not there yet in my small business development, but would expect to use something.

@user-im4dh8je4j 6 ай бұрын

What's the difference with the tax if we do payable to owner or off-set owner's draw account?

@chavilieberman890 Ай бұрын

I just came across this trying to figure out how to record something in quickbooks. It was great and I plan to watch more of your clips. However, I am not sure how to fix the issue I am having. I paid a vendor bill which is already recorded in the books with a credit card that is a personal card and is not in the books. I then paid the personal card from the business account so in fact I have been "paid back". This card is not in my books. So I don't know how to show the bill being paid for. And then I don't know how to record the bank payment to a card that is not in the books. Can you make a video about that?

@GreenLedgerAccounting 3 ай бұрын

Thank you for the explanation! I did have one question for business expenses on personal. Is there any difference between wanting to pay back a purchase I made with personal checking account or my personal credit card? I had made purchases with both but I wanted to be sure if they should be treated differently.

@ClaraCFO 3 ай бұрын

They can be treated the same way!

@user-zc1zu9ir2i 2 ай бұрын

When to make a journal entry or just create an expense?

@whitecollarworkshop 9 ай бұрын

What if you have an owner who uses business cards to spend many thousands of dollars a year for personal stuff and he/she wants to leave it as business expenses and not pay it back?

@sarab8618 7 ай бұрын

Hey Clara, was hoping you could help. If I paid off a business CC with personal CC, how do I pay myself back? Do I have to make a category in Liabilities (A/P) with my personal bank account ? Or do I classify the payee as Owner Investment? I'm lost.

@altafhusaen 3 ай бұрын

Hi, I would treat it as a loan to Business so I will go with the first option.

@Viviko Жыл бұрын

Oh… So I don’t need to create an entire loan agreement or anything like that. I can just note it down on QB. I’m way overthinking this. Lol.

@ClaraCFO Жыл бұрын

Haha, if you need to establish a long-term payment plan, then maybe a loan agreement might make sense. But if you are just talking about minor expenses here and there, then use my guidance in the video.

@cottagekeeper 4 ай бұрын

How do I record receipts found from 2022 where the owner used their personal card for office supplies? Do I enter a journal entry and use the receipt date of 9/24/2022? I'm concerned this is going to change the P&L and Balance Sheet for 2022.

@ClaraCFO 4 ай бұрын

I'd consult your tax accountant on what they'd recommend. Just some thoughts: If it is a small amount, it probably isn't worth trying to record these items now. If it is significant, it could change the taxes owed, and it may make sense to refile the taxes (but that is unlikely). Your CPA may be comfortable booking an entry as of 1/1/2023 for the items, but you'd need to take their recommendation. The business could also pay back the owner in 2024 for these expenses and claim it as a 2024 expense.

@FreeLancerTanzina-wp7ev Жыл бұрын

❤❤❤

@ClaraCFO Жыл бұрын

Thanks 🥰

@user-of1nt1be6l 6 ай бұрын

how do you record a loan from a personal money to the business. because that is not income from the business.

@ClaraCFO 6 ай бұрын

Do you want to be repaid? then you would record a LIABILITY (create a new loan account) the journal entry is debit to cash (whatever you are putting into the business) and the credit is the new liability account (named something like "Loan from Owner"). If you do not care to be repaid, then you can make it an equity transaction and it would be considered an owner investment - so you would do the same journal entry, but instead of the credit to the liability, you would credit an "owner equity" account.

@_iErik 9 ай бұрын

How does this advice change for a sole proprietor business?

@ClaraCFO 9 ай бұрын

It doesn’t at all. You always want to make sure you are separating personal and business expenses

@lisamarr9116 9 ай бұрын

I always call the account Reimbursable Expense when the business owes money. Is thst not correct?

@ClaraCFO 8 ай бұрын

That's an OK way to track it, but you will want to make sure it is zero'd out before the end of the year so it doesn't get accidentally included as a tax deduction.

@user-ns2lq2rv4y 10 ай бұрын

Why wouldn't the owner or employee just file an expense report for reimbursement?

@ClaraCFO 10 ай бұрын

if you've put business charges on your personal card, you could do that. Many businesses don't have an expense report process though.

@brookegarvey7205 7 ай бұрын

I'm trying to fix my quickbooks because a lot of personal charges is coming from our business debit card. So every time there's a personal charge... groceries, entertainment, Amazon etc... I would put it under Equity and then owners draws?? I've been cat organizing it this whole time as personal expense in QB :/ no wonder why everything is screwed up.

@user-vu1ci3fb5l 4 ай бұрын

Well this just confused me even more because everything I have seen has said that the way you are doing it is the way you should be doing it. Are we not supposed to call that Owner's Draw because it's not business related therefore it would fall under the Owner's Draw account.

@noelvisramirezaccounting Жыл бұрын

That sounds beautiful but the clients are a mess and they do what they want they don’t listen to accountants .

@georgesmith9178 29 күн бұрын

Just as quick advice - structure your videos a bit better. Your explanations are good, but on a few occasions you go back and forth between different ideas, e.g., whether you want to be paid back by the business or your want to give that money as an owner's contribution/draw.

@alexruiz8582 11 ай бұрын

Hey,if I'm the business owner and I write my self a check how should I categorize the check?

@John_GGG 11 ай бұрын

It depends on what the check is for.

@lamonteasterjr 11 ай бұрын

Simply an owner’s draw if it’s not a reimbursement

@ab-qn7kv Жыл бұрын

What about piercing the corporate veil?

@ClaraCFO Жыл бұрын

This would actually help protect you by keeping business and personal separate. Talk to your lawyer if you are concerned about this!

@noelvisramirezaccounting Жыл бұрын

But then when they are audited by the IRS they want god to help them 😂😂😂😂😂😂 . God tell them , you tempted evil (IRS ) 😂😂😂😂. I cannot save you right now .