Most business consultants, including myself, would not recommend making a practice of using personal credit cards for business expenses. But, on the other hand, for small and startup companies, it may be a necessity and the only viable option before business credit is established. So how do you keep the books straight?
The first thing to do is set yourself up as a vendor. A vendor? Sounds counterintuitive. But think about it. A vendor is someone that the company owes money to for goods or services provided. If you are using your personal credit card, that makes you a vendor.
So let’s say you have purchased some office supplies and business cards from the local office supply store with your personal credit card. When you get the statement (or you can enter from the receipt – just do not double dip), enter the bill into QuickBooks with you as the vendor. Under the expense tab, enter the proper account with a note in the memo field describing the purchase, the store utilized, and the fact that you used a personal card.
In this example, you would have two entries – one for the office supplies account and one for the advertising and promotion account along with the other information. When you save and close the transaction, the correct expenditure amount and account is charged. To verify, you can go to the reports tab, look at the P & L, and you will see the correct accounting for the expense while the bill is now shown on the Balance Sheet in Accounts Payable.
When you are able (if you are a startup, it may not be right away!), you go to Pay Bills and issue a check to yourself from the company checking account. That’s all there is to it.
About the Author: Ron Miaso, one of the QuickBooks Yoopers, is a Certified QuickBooks ProAdvisor in Desktop and Online and before forming Delta Business Solutions was a Senior Finance Manager in the auto industry where he managed a $500 million annual operating budget and helped develop long range business plans.
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