Company purchases from personal funds

leaparsons
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Company purchases from personal funds

How do I set up MYOB to record items perchased by personal funds for the business.  Do I set up a Liability Account called Loan - Business Owner....if so, how do I set it up?

 

Thank you - reasonably new here...

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Tracey_H
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Re: Company purchases from personal funds

Hi @leaparsons 

 

Thanks for your post. There are a few different ways of handling this and generally it's best to discuss which way suits your business with your accountant. Creating a loan liability account is certainly one of the common ways of recording these purchases.

 

The first thing you need to do is create the liability account by clicking on your business name>>select Accounts List and click Add new. In the Type field select Credit card as this makes the account available as a Pay from/to account when recording transactions.

 

When you record a purchase paid for by personal funds change the Pay from field in Spend Money or Pay Bills to the loan liability account. When the business reimburses you record a transfer funds transaction with the Transfer from account being the business bank account and the Transfer to account being the loan liability account.

 

Please let me know if you need further help.

 

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

Cheers,
Tracey
Previously @bungy15

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leaparsons
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Re: Company purchases from personal funds

Hi Tracey,

 

Thank you for your response, so to clarify, I have completed the following:

 

1.  Created a "directors Loan" in Liability

2.  Created the bill and paid from directors loan

 

My  question now is, how do I enter funds that I transferred from my personal bank account to the business bank account that paid this invoice?

Tracey_H
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Re: Company purchases from personal funds

Hi @leaparsons 

 

My hot tip for entering transactions into your accounting software is that your software needs to be the same as what happened in real life.

 

If you are transferring money from your personal account into your business account in real life you would do the following in your software:

 

  • record a Transfer funds transaction with the Transfer from account as the Director Loan account and the Transfer to account as the bank account. This transaction is a copy of the internet bank transfer withdrawing the funds from your personal account and depositing to the business bank account.
  • record the Pay Bills/Spend Money transaction with the Pay from account as the business bank account because you actually paid the bill from the bank account
  • when you reimburse your personal account, record a Transfer funds transaction with the Transfer from account as the bank account and the Transfer to account as the Director Loan account. This transaction is a copy of the internet bank transfer withdrawing the funds from the business bank account and depositing to your personal account.

If you are paying bills directly from your personal account:

 

  • record the Pay Bills/Spend Money transaction with the Pay from account as the director loan account because you actually paid the bill from your personal account
  • when you reimburse your personal account, record a Transfer funds transaction with the Transfer from account as the bank account and the Transfer to account as the Director Loan account.

So in your situation you will need to edit the Pay Bill transaction and change the From account to the bank account. Then record a transfer funds transaction to reflect the transfer of money from your personal account to your business account.

 

I hope this clarifies it for you. If you need further help please let me know.

 

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

Cheers,
Tracey
Previously @bungy15

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