Where do I put owner expenses?

rsbrsb Member Posts: 1

My company is new and hasn't made any income yet, but myself and my partner are spending money on expenses such as travel and conferences. What is the appropriate equity account to place these expenses? A separate owner equity/investment/draw account, or shareholder loan? We want to be reimbursed when the company starts to recieve income.

Comments

  • MikegMikeg Member Posts: 383 ✭✭✭

    rsb,
    You would set up a either a partner loan - John Doe or a shareholder loan - John Doe depending on whether the legal entity you have is a partnership or S-Corp. Speaking from a US perspective. Items that are paid using personal funds are posted as a debit to the appropriate expense or asset and a credit to the partner/shareholder loan.
    Best of luck!
    Mike G, CPA
    www.mgfinancial.net
    Affordable Solutions for your business

  • Jacinto_ChoJacinto_Cho Member Posts: 16

    You should register it in other accounts receivables. and when you pay back the business the bank increases and the account receivable decrease

  • RMenschelRMenschel Member Posts: 11

    Since you want to be reimbursed, you can create an equity category of Partner Loans, and a subcategory for each partner. When your company has income and can repay those loans, do. Once those loan balances hit zero, then you can start distributing profits.

    Alternately, create Partner Loans as a subcategory of liabilities; they would then be seen as loans to the company to be paid back, not equity contributions to be paid back.

  • Jacqui_EN_2018Jacqui_EN_2018 Member Posts: 10

    @Jacinto_Cho said:
    You should register it in other accounts receivables. and when you pay back the business the bank increases and the account receivable decrease

    Accounts Receivable will get counted as income and therefore be taxed. This is a loan, liability, or reimbursable. He should not have to pay any taxes on it.

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