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How to record payment of business credit card with owner's personal funds

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fiveofus
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How to record payment of business credit card with owner's personal funds

Hello,

 

We've had to use personal funds to make a payment on our business credit card but am unsure of how to record this in MYOB Essentials. 

 

I think I need to increase the business liability to the owners, and decrease the business credit card liability to the bank, but not sure how to do this.

 

Many thanks in advance to anyone who can help me.

 

 

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DuncanS
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Re: How to record payment of business credit card with owner's personal funds

@fiveofus

 

There have been many posts on this topic on the MYOB Community.

 

It depends under which structure your business operates under.

 

A Company has a Current Liability called Loan from Director which should be setup as a Credit Card.

 

You can use Spend Money (or Receive Money).

The accounting treatment is Dr Credit Card Cr Loan from Director.

 

If you are a Sole Trader, there is a ledger called Equity/Drawings in the Equity section.

You can do a journal  Dr Credit Card Cr Equity/Drawings or Receive Money to the Credit Card.

 

Let me know how you go.

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E duncan@businessadvicetax.com.au T 02 9904 3672 7 days
fiveofus
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Re: How to record payment of business credit card with owner's personal funds

Duncan, many thanks for getting back to me.

I have read other posts on this topic and from these had previously managed to create a general journal like this:

CR:  Loan from Owners

DR: Business Credit Card

 

Today however, when preparing our BAS statement, the GST Report is showing this amount as 'Other GST-free sales' (G3) and I became concerned that I had therefore not recorded this correctly, as I'm not sure why it is being reported as 'GST free sales'.

 

Thankyou

DuncanS
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Re: How to record payment of business credit card with owner's personal funds

@fiveofus

 

I prefer to use Spend Money/Receive Money instead of Journals wherever possible.

If you are a Company, you would not do a Journal for the transaction.

If you are a Sole Trader, the Credit is to Equity/Drawings.

 

The GST coding for the transaction would be N-T.

Check the transaction for the correct coding.

 

It is good that you have reviewed your MYOB Reports before lodging your BAS.

I have attached my GST Checklist.

One of the procedures is to check the GST Coding.

As you have discovered, one of the roles of a Business Owner is to determine what type of sales occur from a GST perspective ie  GST  Input Taxed (eg residential rent)   Free (eg medical or exports)

 

Hope this helps.

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E duncan@businessadvicetax.com.au T 02 9904 3672 7 days
fiveofus
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Re: How to record payment of business credit card with owner's personal funds

Hi Duncan,

Many thanks for your help.  I have checked and you are right, my GST coding was set at 'GST inclusive' which is why it was showing incorrectly on my BAS report.

 

I really appreciate your help, I was beginning to feel a bit overwhelmed so glad to have it sorted. Thaks also for the GST checklist.

 

I am conscious of not taking up more of your time, but I am just curious as to why its better to use "Spend/Receive Money" instead of creating a journal?  We are a partnership and have only been operating a short time, but will look at how I can do this in future.

 

Many thanks again.

DuncanS
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Re: How to record payment of business credit card with owner's personal funds

@fiveofus

 

Interesting question regarding Journals.

 

Most business owners find it difficult to grasp Debits and Credits.

Accounting Software often does not talk about Debits and Credits.

 

Spend Money and Receive Money is better from a Review Perspective both for the Business Owners and Tax Accountant or BAS Agent.

Cards and Narration should be used for all transactions.

My preference is to put as much detail as possible into Ledger/Account Names, Cards and Narration.

 

Maybe I should have been a Teacher not a Tax Accountant - the MYOB Community allows me to undertake that passion and share my knowledge.

 

Hope your business goes well in 2017.

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E duncan@businessadvicetax.com.au T 02 9904 3672 7 days
fiveofus
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Re: How to record payment of business credit card with owner's personal funds

Thanks Duncan - much appreciated!

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