Here is where I answer your bookkeeping, accounting, or tax questions. No question is too silly or “dumb.” I am here for you!
As a disclaimer, response posts do not constitute legal or tax advice. I am not a lawyer. Your specific tax situation may differ from questions submitted and may not result in the expected tax or financial outcome. Please consider hiring me as your tax consultant if you would like your specific tax situation to be researched and planned for tax or financial reporting.
Loose Pockets
Question: I’ll sometimes forget my business debit card at home and I’ll use my personal debit card to pay for business purchases. How do I record these business expenses in my bookkeeping?
-Anonymous
Now that you’re a business owner, it’s important to keep your personal and business finances separate. If you’re operating as a Single-Member LLC, you begin to erode your personal liability protections by comingling your personal funds with your business funds. With that being said, if you’re using QuickBooks Online to handle your business bookkeeping, there is a way of recording business expenses paid with a personal bank account or credit card account. Please see the following video tutorial by the Intuit team: How to pay expenses with owner funds
The tutorial walks you through the recording of the business expense and then adding a second line item to the expense entry to record the contribution of capital. The capital contribution account can either be an Owner’s Investment account, Partner’s Contribution account, or Additional Paid-In Capital account, depending on your type of business. These accounts are a type of equity account. You are essentially recording a contribution of capital to your business because it’s as if you transferred money to your business in order to pay for the business expense, without actually going through the conventional method of transferring money from your personal account to your business account.