Record Reimbursements to Yourself for Business Expenses Paid with Personal Funds

[@veronicakutt5385]

thank you for the informative video. I do have a question regarding applying the sales tax to these business expenses using personal funds. Do we not record the sales tax that is charged on these receipts, so it will offset when we file our sales tax returns? thanks

[@michellenewberry]

Generally the sales tax on the purchase/expense side is included as part of the expense total and not separated, but it's best to contact a tax accountant in your state for specifics for your situation and location. Here is a general article related to sales tax and purchases of inventory that might clarify things: ttps://www.accountingtools.com/articles/how-to-account-for-sales-tax-paid-on-inventory.

[@DonDoering]

Thanks, Michelle. In your earlier video you showed business expenses from personal accounts in the Wave App as being made from the Owner's Contributions Account, with the appropriate expense account like Meals and Entertainment in your $10 coffee example. Here, you show categorizing the reimbursement in the expense account like Meals and Entertainment. So how do you then account for the change in Owner's Contribution when you make the reimbursement to yourself? Thank you!

[@michellenewberry]

I know it's confusing. In this video you are reimbursing someone for an expense, which is still an expense account, but the payout is the checking account since you would be making a payment. In the other video, you are simply recording an expense that happened to be paid by an outside bank account or credit card account. If it would help for me to make another video to clarify the difference let me know.

[@realtorokaloosawaltoncount8828]

Thanks for your simple and short video. Appreciate the details given. I use my personal Amazon card to make some purchases for business because I have a Prime account and get free shipping and also use Amazon charge card and get 5% back. I plan on paying myself back for these purchases. Since I am using my Amazon charge card for both personal and business usage, does the IRS look unfavorably at this co-mingling?

[@michellenewberry]

Just keep good records.

[@mike2959]

S-Corp owner here. Have a 100% home office. It’s 280sqft. I want to use what the IRS calls the simplified method for home office which is $5.00 sqft. This is $1400.00 per month in reimbursement to me. How to record that in QBO? I’m guessing it’s just an expense, but what category? It’s not payroll, it’s not maintenance and repair lol,

[@michellenewberry]

Rent expense is what I would use.

[@ahunt]

Ive used personal funds to pay for my business when it was just starting, i did so by depositing funds at the atm and categorizing it as owners equity. I can see the total in that owners equity account. If i wanted to reimburse myself would i put it as a negative line item under owners equity so that it shows ive reimbursed myself with that account? I hope that question makes sense and you can help.

[@michellenewberry]

Yes that's correct. By paying yourself back for your investment in the business, you're simply doing the opposite of investing. So an entry in the opposite direction is perfect. In accounting textbooks it's taught to have separate "Owner Investment" and "Owner Draw" Equity accounts, but for a sole proprietorship with one owner it's fine to put it all in and out of one account.

[@ahunt]

@@michellenewberry ive been using separate accounts. Thank you for your knowledge. I guess my next question is does this get taxed as income?

[@mike2959]

A LLC that elects to be taxed as a S Corp must have an accountable plan in place to reimburse for home office, auto (that’s personally owned) etc… My question is what category is this in QB? I’m guessing it’s just an expense, but am I the vendor?, and what category? It’s not labor, not cost of goods….

[@michellenewberry]

I typically use a category that relates to the expense itself. Rent expense, telephone expense, automobile expense, etc.