Hello there, kynethjane.
To properly account for reimbursements to the company owner who made payments on behalf of the business, the first step involves establishing a Current Liability account to monitor the outstanding amount owed to the owner for covering expenses on behalf of the company as mentioned above by my colleague.
Here's how:
- Select the Gear icon, then Chart of Accounts and New.
- From the Account Type dropdown, choose Other current liabilities.
- From the Detail Type dropdown, pick Current Liabilities.
- In the Name field, type a relevant name such as "Payable to owner".
- Select Save and Close.
Next, create an expense to record this transaction.
Follow the steps below:
- Choose + New. Select Expense.
- Select the Payee.
- From the Category dropdown, pick the account Payable to the owner.
- In the Amount field, enter the total purchase amount as a negative figure.
- Note: When done correctly, the amount at the top right should read CA $0, as no cash has left the business at this point.
- Prefer the Save and Close.
After that, utilize the transfer to, move funds.
See this:
- Select + New. Select Transfer.
- From the Transfer Funds dropdown, select the name of the bank account used to pay the owner.
- From the Transfer Funds dropdown, select the account Payable to the owner.
- From the Currency dropdown, if required, change the currency in which it was paid.
- In the Transfer Amount field, enter the amount reimbursed.
- Select Save and Close.
However, I suggest reaching out to your accountant to make sure everything is recorded properly within QBO. It also helps when you need to categorize transactions.
Please know that we are still here to guide you along the way. Notify us below.
