Last week, I brought you some major problem-solving knowledge about how to handle using your personal funds for business expenses.
If you missed it, you can check it out on the blog here.
Don’t forget to download that FREE and really awesome expense report template.
So this week, I want to answer the question I get about the reverse situation.
What do you do when you use your business funds for personal expenses.
That is a fairly simple answer.
You again have to decide how you want to proceed. And by that I mean, will you be reimbursing the business or not?
If you will be reimbursing the business, I suggest using an Expense account called “Other Expenses” for this.
First, you categorize the personal expense transaction to this account.
Second, you make a payment to the business for the exact amount. When that deposit hits the bank, you’ll categorize that deposit to the same “Other Expenses” account.
What this does is zero out the original expense so at the end of the reimbursement, nothing actually effects your bottom line.
Now, what if you won’t be paying your business back?
If you don’t want to reimburse the business, that’s cool. Simply categorize the personal expense as an Owner’s Distribution and call it a day.