what if it was bought at Walmart or something like that do I create a customer called Walmart or a vendor called Walmart? Example I used my personal account to purchase a laptop and then again my personal account to purchase copier paper from Walmart. How do I record this other than a JE debiting the Company Supplies account and Crediting the Owner's Draw account? Please help me figure this out.
Yes, the expense account is whatever expense the client purchase is for. You can not add the payment coming from and expense account. That’s what we need an equity account to record where the payment is coming from. You can name the equity account “Due to Shareholder”
@@ClaudiaXperts oh interesting. My "Due to shareholder" is a current liability, as corp is technically owing to shareholder. Later I can just do a direct deposit from the corp bank account to a shareholder personal account and it won't be considered as an expense for the business or as taxable income for the shareholder
Only if you actually transfer the money to the card. If not you will bring the business credit card out of balance and you will not be able to reconcile to balance.
THANK YOU!! 1. Question, can't a person create an expense and add a second line item for owner investment to balance it out? 2. Also, I used a personal credit card for start-up, not a checking account, so how would this change the creation category of the personal clearance account? Still use Bank?
When we create a clearance account it is for transactions paid with personal funds. Those can be personal credit card, cash, debit card from personal account. It includes all forms of payment not connected to QuickBooks
Yes, if you record as a Journal entry. If you record as expense then you will need to send to the clearance account or you can do a 0 balance transaction by creating a product routed to owner’s investment and offset it in the expense. Different methods than what I taught in this video
No, you will need to use a bank account to pay it. Use cash on hand and do a Journal entry to move to an Equity account. The other option is to use a Journal entry to record the expense instead of a bill
When you received the money as income, why do you need to send the money to undeposited funds? Couldn't you send the money directly to the personal funds account instead?
You can, I prefer to send all transactions to Undeposited Funds to keep track of the deposits in the bank. If you never deposit them you may send it to Owner’s Distributions
I feel like this could have been useful, but I am working with an LLC, so I believe I'm supposed to keep personal accounts out of my chart of accounts... I only made a few purchases for my business before I could get my business bank account up, but they're a little tricky right now. Would love some input.
Thank you! How do you record transfers between Personal/Business checking accounts in relation to Personal Funds Clearance? Are transfers factored in to Personal Funds Clearance? For example, when you transfer from Personal Checking to Business Checking, it only allows 2 fields (to/from). How do you factor in Personal Funds Clearance and/or Owner's Investment? I have Business Checking "synced" with QuickBooks so it auto-populates Business Checking in one field and that only leaves 1 other field option (there's only to/from). Thanks again!
Kate for transactions recorded on personal checking(not connected to QuickBooks online, you will clear the account by debiting the personal account and crediting owner’s investment which is an equity account. You will need to clear the personal checking and bring it up to zero each month. You can do a transfer from owner’s investment to the personal bank account( not linked in QuickBooks for the amount that is negative by.
Does this new account have to be connected to quickbooks? in the video your example has a balance. Do I need to have that in order to categorize an outside payment? Or can I just use the new clearance account without connecting it and without any balance showing?
It means that you may have owner’s investments categorized as personal expenses. Just categorize the transactions as owner’s investments if they are deposits
This is exactly what I was looking for - thank you! I have a question: my business started on Jan 4, 2023 and I have 21 expense transaction (startup related Sole Proprietorship) in November and December of 2022. Although these expenses occurred in the last calendar year, can I record them in the way you explained with the clearing account?
Question: how to record mileage reimbursement as income? My husband has an S Corp and he uses his personal car to travel to work. His employer pays him for the miles accumulated in the month to go to work. This amount is also included on his paycheck. I believe the mileage reimbursement is an accountable plan because it meets all the requirements. Please and thank you in advance. Laritza Ruiz
Thank you for your video! I like how you explain in a very simple way. I have a personal checking account linked in qb that I sometimes use for to pay for business expenses. I usually match these expenses however I noticed that in doing the journal entries to record to the owner's equity account, it duplicates the amount. Do I still create a personal funds account? I'm not sure how to correct this.
If so not recommend to link a personal checking account to your business. Keep them separate, but if you do you should not create an expense without matching to the account or you will be duplicating the transactions.
Our supplier gave us a credit note to do marketing, how should i record it? I’m thinking to record it as accrued income or accrued expense and whenever we have a marketing expense i will use to cover the expense. Any advice?
This is if you want to track it in the balance sheet. If you just want to record it without tracking the amount you are holding as Marketing Credit you can just credit sales and debit marketing expenses. Usually for those transactions you can just keep it in the balance sheet as my first suggestion.
I am a single member LLC, can't I just do a JE to record my expenses to "owner draw"? Also, I put $1200 cash into the company to start, so would these both go to owner draw beings an LLC? It is very confusing because the structure of the business determines how you enter this.
If you are paying business bills with personal funds to add that to owner’s investment. If you are buying personal items with your business funds then it is owner’s draw. If you are an S corp LLC the personal items purchase with business funds will count as part of income taken from the business. If you are not an S corp then you would categorize the same. But whatever the net income from the business is what you will be taxed on regardless of what you already taken as a distribution.
If you are tracking for a reimbursement to yourself you may categorize the transaction as a liability to the company and payable to you as a current liability. Then you categorize the bank transaction that is to reimburse the liability account to created.
Hi Claudia. Great video. I have subscribed! I am pretty new to the Quickbooks system and refreshing my bookkeeping skills. I want to know that when you have to repay the investor, is there a way of doing that by e-transferring the amount of repayment to the investor's personal account or does it have to be a check to the investor? Is that possible? Thanks for responding. I look forward to looking at your other videos. I love how you go deeper into explaining in plain non-bookkeeping language.😃
Hi. Can you help me with this problem. Suppose there are four investment properties, each with their own books. Assume that the four properties and their respective books are managed by a third-party property management firm. Our company hired and manages the property manager, and is ultimately responsible for the financial performance of the buildings. The property management firm often uses licensed contractors to perform routine maintenance on the buildings. When this occurs, the property management firm pays the contractors directly from the respective buildings’ accounts, and records the transactions appropriately. However, for larger capital improvement projects on these buildings, our company sometimes uses an unlicensed contractor whose work is cheaper. Because the contractor is unlicensed, the property management company requires that our company pays the contractor directly. Our company typically pays the contractor via Zelle, or through a check. How would you recommend our company keeps track of these “off-book” expenses so they are appropriately accounted for under the respective buildings at the end of the tax year? And how will we reimbruse this expense. Please be as specific as possible.
Instead of getting the clearing account to 0 by crediting Owners Investment, could I not use Accounts payable? Because this would mean the personal account is now owed money by the business so it would be a payable account?
Not accounts payable, but you can create a short term liability account name due to owner, so when you withdraw the money to pay yourself you categorize as the liability account and clear the balance.
Hi Claudia, I am just moving an expense into Personal funds account and have noticed it is a foreign currency. I just found out that you can't set up that is the component my client bought(EasyStart). How do I show those amounts? I have the US amt that I was charged and I have the full cost of the Canadian currency I want to use. This is a twist. Also, IF my client decides just to leave that money in the business, do you have to change it to owner's equity? (he is a sole proprietor) Much thanks for answering my questions. 🥰
Hi Flora, this is a whole new subject which is foreign currency. QuickBooks does have a tool to turn on foreign currency. The only tricky part is that if you turn it on it can never be turned off. If he does business in a foreign currency all the time it is worth to change it. US dollar should be the home currency and you can change back and forth from one currency to another.
@@ClaudiaXperts Claudia, he only used this one vendor and does not want to use them again(not saying he won't use other US vendors). So can I show it another way? I have broken it down by 3 categories: 1) is the job materials in CDN funds as per bank statement (I can't see the statement, it was just given to me) $561.79 2)I added an account called: Exchange loss/gain and put the vendor's amount on invoice(other currency: US$) $400 3) subtracted both numbers and put it under bank charges :$1.30. I hope others are going to learn from this as well. You are a great teacher. Mochas gracias!
How can i have my employers keep track of their receipts when they make an expense for instance when its a receipt and so they wont loose it or be misplaced
Set them up to send receipts into QuickBooks. Here is the link for my video on how to forward receipts into QuickBooks Online: ua-cam.com/video/CXaOLg7BhEY/v-deo.html
Hello, I have a client who transferred money three times on 2022 from his business checking account tp his personal savings account. Could you please explain what the best way to register these transactions in QBO is? I register the transaction as owner's Draw - Equity - Partner Distributions, but I know that is also an income for the owner. Also, he paid the business credit card with his personal checking account. How can I register this? as a journal entry? Do you happen to have webinars or any form of contact where I can ask questions? Thank you
Hi Angela, you would categorize anything that is not business related as owner’s draw or personal expense equity account. This way those expenses will not be in the Profit & Loss. You can categorize the personal credit card payment as owner’s draw no Journal entry necessary if those expenses are coming through the business bank account
@@ClaudiaXperts Thank you for the quick reply. Now, would this be categorized as income for the owner? On the second question, what I meant to ask was that the owner paid the company's credit card with his personal checking account, how would this be recorded? Would it be as "Personal Funds Clearing Account"? It was a total of $16500, not sure if the amount is relevant.
Ok i followed these direction and now i have a 3250 balance in my Owner's Investment account. How would I pay this money back to my person account out of the business account?
Just transfer the money to your personal account for the amount you spent from personal and categorize the transaction as owner’s investment it will zero out the account.
Out of subject if you don’t want to add your checking account to quick books can you manually type in a check amount? Anyone know this I’m starting book keeping soon and the person I’m doing it don’t want to link there checking account to quick books very old school person.. can anyone tell me if you can do this? Sorry off subject
Take a look at my videos on how to enter transactions manually or import CSV file into QuickBooks. I would not work with a customer that is not willing to at least provide a CSV file. It is a lot of work to manually enter transactions.
You have no idea how grateful I am for this video. I've been racking my brain for 2 weeks trying to figure this out haha. Thank you so much!
Great to hear! Thanks for watching and for the kind words!
what if it was bought at Walmart or something like that do I create a customer called Walmart or a vendor called Walmart? Example I used my personal account to purchase a laptop and then again my personal account to purchase copier paper from Walmart. How do I record this other than a JE debiting the Company Supplies account and Crediting the Owner's Draw account?
Please help me figure this out.
@@DarlaJones-l4e If you want to record as a Journal entry you will debit office supplies and credit owner’s investment.
God Bless this woman! I have been looking for this info in a while.
This channel is underrated. Subscribing now! I wish i have more than 1 like.
Glad it was helpful!
how can I hire you@@ClaudiaXperts
Thanks for teaching your classes so well.
You are very welcome! Glad you liked it!
Thank you! Personally as DIY bookkeeper I record such transactions to the "Expense" and "Due to shareholder" accounts.
Yes, the expense account is whatever expense the client purchase is for. You can not add the payment coming from and expense account. That’s what we need an equity account to record where the payment is coming from. You can name the equity account “Due to Shareholder”
@@ClaudiaXperts oh interesting. My "Due to shareholder" is a current liability, as corp is technically owing to shareholder. Later I can just do a direct deposit from the corp bank account to a shareholder personal account and it won't be considered as an expense for the business or as taxable income for the shareholder
Most probably I'm wrong) lol
@@ivan33776 Ivan this works as well, as long as you clear the liability account.
You rock! Great video! Loving the accent
Awe thank you for your kind words!!
Wow, thank you!
When you clear out the personal funds can you do a balance transfer from a personal card to a business credit card?
Only if you actually transfer the money to the card. If not you will bring the business credit card out of balance and you will not be able to reconcile to balance.
THANK YOU!! 1. Question, can't a person create an expense and add a second line item for owner investment to balance it out? 2. Also, I used a personal credit card for start-up, not a checking account, so how would this change the creation category of the personal clearance account? Still use Bank?
When we create a clearance account it is for transactions paid with personal funds. Those can be personal credit card, cash, debit card from personal account. It includes all forms of payment not connected to QuickBooks
Yes, if you record as a Journal entry. If you record as expense then you will need to send to the clearance account or you can do a 0 balance transaction by creating a product routed to owner’s investment and offset it in the expense. Different methods than what I taught in this video
Days of the Week Song
SUNDAY
MONDAY
TUESDAY
WEDNESDAY
THURSDAY
FRIDAY
SATURDAY
Thanks for that video. You did a great job. Question- Can you pay an expense or bill in QBO directly from the Equity account ( owners investment) ?
No, you will need to use a bank account to pay it. Use cash on hand and do a Journal entry to move to an Equity account. The other option is to use a Journal entry to record the expense instead of a bill
This is sooo good! Thank you so much ... this literally saved me and helped with confusion.
So glad the video “How to record business expense with personal funds in QuickBooks Online was helpful!
When you received the money as income, why do you need to send the money to undeposited funds? Couldn't you send the money directly to the personal funds account instead?
You can, I prefer to send all transactions to Undeposited Funds to keep track of the deposits in the bank. If you never deposit them you may send it to Owner’s Distributions
I feel like this could have been useful, but I am working with an LLC, so I believe I'm supposed to keep personal accounts out of my chart of accounts...
I only made a few purchases for my business before I could get my business bank account up, but they're a little tricky right now. Would love some input.
So you could just record them manually. This video explains what to do.
Can I just directly put "capital investment" in the "payment account" method when doing it in the expense window?
When your record as owner investment it will not record the expense and you would not have the deduction for the expenses.
Thank you! How do you record transfers between Personal/Business checking accounts in relation to Personal Funds Clearance? Are transfers factored in to Personal Funds Clearance? For example, when you transfer from Personal Checking to Business Checking, it only allows 2 fields (to/from). How do you factor in Personal Funds Clearance and/or Owner's Investment? I have Business Checking "synced" with QuickBooks so it auto-populates Business Checking in one field and that only leaves 1 other field option (there's only to/from). Thanks again!
Kate for transactions recorded on personal checking(not connected to QuickBooks online, you will clear the account by debiting the personal account and crediting owner’s investment which is an equity account. You will need to clear the personal checking and bring it up to zero each month. You can do a transfer from owner’s investment to the personal bank account( not linked in QuickBooks for the amount that is negative by.
Brilliant thank you
You're very welcome
Does this new account have to be connected to quickbooks? in the video your example has a balance. Do I need to have that in order to categorize an outside payment? Or can I just use the new clearance account without connecting it and without any balance showing?
The clearance account is perfect! We do not connect any account to record those payment since they come from personal funds.
Well explained, thank you.
You are very welcome!
Thank you for the video. How do you clean out the personal fund if the amount is positive?
It means that you may have owner’s investments categorized as personal expenses. Just categorize the transactions as owner’s investments if they are deposits
That was great! Thanks
Glad it helped you!
This is exactly what I was looking for - thank you! I have a question: my business started on Jan 4, 2023 and I have 21 expense transaction (startup related Sole Proprietorship) in November and December of 2022. Although these expenses occurred in the last calendar year, can I record them in the way you explained with the clearing account?
Yes you can
Glad you liked it Gerhard
@@ClaudiaXperts thank you again, this is very helpful!
@@gerhardtratter4336 you are very welcome!
very useful. thank you
So glad it was helpful!
Question: how to record mileage reimbursement as income?
My husband has an S Corp and he uses his personal car to travel to work. His employer pays him for the miles accumulated in the month to go to work.
This amount is also included on his paycheck.
I believe the mileage reimbursement is an accountable plan because it meets all the requirements.
Please and thank you in advance.
Laritza Ruiz
Hi Laritza if he is being paid by hi employer you will not add the expense nor the income to your books since he is being reimbursed for it.
Thank you for your video! I like how you explain in a very simple way. I have a personal checking account linked in qb that I sometimes use for to pay for business expenses. I usually match these expenses however I noticed that in doing the journal entries to record to the owner's equity account, it duplicates the amount. Do I still create a personal funds account? I'm not sure how to correct this.
If so not recommend to link a personal checking account to your business. Keep them separate, but if you do you should not create an expense without matching to the account or you will be duplicating the transactions.
Our supplier gave us a credit note to do marketing, how should i record it? I’m thinking to record it as accrued income or accrued expense and whenever we have a marketing expense i will use to cover the expense. Any advice?
You can create an asset account called marketing funds to record it.
Credit sales debit marketing funds, when you use it reverse the journal entry.
This is if you want to track it in the balance sheet. If you just want to record it without tracking the amount you are holding as Marketing Credit you can just credit sales and debit marketing expenses. Usually for those transactions you can just keep it in the balance sheet as my first suggestion.
I am a single member LLC, can't I just do a JE to record my expenses to "owner draw"? Also, I put $1200 cash into the company to start, so would these both go to owner draw beings an LLC? It is very confusing because the structure of the business determines how you enter this.
If you are paying business bills with personal funds to add that to owner’s investment. If you are buying personal items with your business funds then it is owner’s draw. If you are an S corp LLC the personal items purchase with business funds will count as part of income taken from the business. If you are not an S corp then you would categorize the same. But whatever the net income from the business is what you will be taxed on regardless of what you already taken as a distribution.
Question: if I’m tracking for a reimbursement would I add the funds to the account I’m writing the reimbursement check out of ?
If you are tracking for a reimbursement to yourself you may categorize the transaction as a liability to the company and payable to you as a current liability. Then you categorize the bank transaction that is to reimburse the liability account to created.
Hi Claudia. Great video. I have subscribed! I am pretty new to the Quickbooks system and refreshing my bookkeeping skills. I want to know that when you have to repay the investor, is there a way of doing that by e-transferring the amount of repayment to the investor's personal account or does it have to be a check to the investor? Is that possible? Thanks for responding. I look forward to looking at your other videos. I love how you go deeper into explaining in plain non-bookkeeping language.😃
Hi Flora how you pay the investor either e payment or check it does not matter. The most important thing is that you categorize it correctly
@@ClaudiaXperts Muchas gracias! Love your videos. I thought I was going to give up on bookkeeping but you are my QBO angel now. 😇
@@florak1087 Awesome Flora! Glad to hear I was able to help you!
Hi. Can you help me with this problem.
Suppose there are four investment properties, each with their own books. Assume that the four properties and their respective books are managed by a third-party property management firm. Our company hired and manages the property manager, and is ultimately responsible for the financial performance of the buildings.
The property management firm often uses licensed contractors to perform routine maintenance on the buildings. When this occurs, the property management firm pays the contractors directly from the respective buildings’ accounts, and records the transactions appropriately. However, for larger capital improvement projects on these buildings, our company sometimes uses an unlicensed contractor whose work is cheaper. Because the contractor is unlicensed, the property management company requires that our company pays the contractor directly. Our company typically pays the contractor via Zelle, or through a check.
How would you recommend our company keeps track of these “off-book” expenses so they are appropriately accounted for under the respective buildings at the end of the tax year? And how will we reimbruse this expense. Please be as specific as possible.
This would be a question to your CPA. There are many things to consider that I would not be able to answer without a personal consultation.
Instead of getting the clearing account to 0 by crediting Owners Investment, could I not use Accounts payable? Because this would mean the personal account is now owed money by the business so it would be a payable account?
Not accounts payable, but you can create a short term liability account name due to owner, so when you withdraw the money to pay yourself you categorize as the liability account and clear the balance.
Hi Claudia, I am just moving an expense into Personal funds account and have noticed it is a foreign currency. I just found out that you can't set up that is the component my client bought(EasyStart). How do I show those amounts? I have the US amt that I was charged and I have the full cost of the Canadian currency I want to use. This is a twist.
Also, IF my client decides just to leave that money in the business, do you have to change it to owner's equity? (he is a sole proprietor) Much thanks for answering my questions.
🥰
Hi Flora, this is a whole new subject which is foreign currency. QuickBooks does have a tool to turn on foreign currency. The only tricky part is that if you turn it on it can never be turned off. If he does business in a foreign currency all the time it is worth to change it. US dollar should be the home currency and you can change back and forth from one currency to another.
@@ClaudiaXperts Claudia, he only used this one vendor and does not want to use them again(not saying he won't use other US vendors). So can I show it another way? I have broken it down by 3 categories:
1) is the job materials in CDN funds as per bank statement (I can't see the statement, it was just given to me) $561.79
2)I added an account called: Exchange loss/gain and put the vendor's amount on invoice(other currency: US$) $400
3) subtracted both numbers and put it under bank charges :$1.30.
I hope others are going to learn from this as well. You are a great teacher. Mochas gracias!
@@florak1087 you are doing perfect Flora! That’s exactly the right process
@@ClaudiaXperts thank you, Claudia. I might be getting my accounting mojo back. It all comes back like riding a bike.😁
Isn’t this categorized as a liability under Accounts Payable ?
It depends, if you want to keep track of it to get paid back then yes. If not then just classify as equity.
How can i have my employers keep track of their receipts when they make an expense for instance when its a receipt and so they wont loose it or be misplaced
Set them up to send receipts into QuickBooks. Here is the link for my video on how to forward receipts into QuickBooks Online:
ua-cam.com/video/CXaOLg7BhEY/v-deo.html
Hello, I have a client who transferred money three times on 2022 from his business checking account tp his personal savings account. Could you please explain what the best way to register these transactions in QBO is? I register the transaction as owner's Draw - Equity - Partner Distributions, but I know that is also an income for the owner.
Also, he paid the business credit card with his personal checking account. How can I register this? as a journal entry? Do you happen to have webinars or any form of contact where I can ask questions? Thank you
Hi Angela, you would categorize anything that is not business related as owner’s draw or personal expense equity account. This way those expenses will not be in the Profit & Loss. You can categorize the personal credit card payment as owner’s draw no Journal entry necessary if those expenses are coming through the business bank account
I don’t have a live webinar now but is coming soon stay tuned.
@@ClaudiaXperts Thank you for the quick reply. Now, would this be categorized as income for the owner? On the second question, what I meant to ask was that the owner paid the company's credit card with his personal checking account, how would this be recorded? Would it be as "Personal Funds Clearing Account"? It was a total of $16500, not sure if the amount is relevant.
@@AngelaBaena you can put it as owner’s investment which is a contra account for owner’s distributions
forgot to ask....can you show us how this shows up in reports,(whichever is best to show it) please? Much appreciated.🙂
Check the last video I did this week on Balance Sheet in QuickBooks Online
@@ClaudiaXperts will do! THX
Ok i followed these direction and now i have a 3250 balance in my Owner's Investment account. How would I pay this money back to my person account out of the business account?
Just transfer the money to your personal account for the amount you spent from personal and categorize the transaction as owner’s investment it will zero out the account.
Out of subject if you don’t want to add your checking account to quick books can you manually type in a check amount? Anyone know this I’m starting book keeping soon and the person I’m doing it don’t want to link there checking account to quick books very old school person.. can anyone tell me if you can do this? Sorry off subject
Take a look at my videos on how to enter transactions manually or import CSV file into QuickBooks. I would not work with a customer that is not willing to at least provide a CSV file. It is a lot of work to manually enter transactions.
@@ClaudiaXperts ok thanks so much I’ll take a look
@@Sicilainblood you are welcome