Adding personal items to business

Studio208Studio208 Member Posts: 4

Hello all, after days of trying I give up on how to add personal items such as my van, zero turn mower, chain saws etc. to the handyman service I'm about to start. I have no idea how to enter $50k in items to a business so it shows the business still owes me $50k and it doesn't show up as an asset. Any help gratefully accepted.

Comments

  • MikegMikeg Member Posts: 299 ✭✭✭

    Studio208,
    The way you get assets on the books is to debit the asset and credit either due to owner or equity. You will need to set up the asset categories i.e Equipment, Automobiles etc. Keep in mind if you are transferring assets to a business they should be titled in the business name. Most of the stuff does not have a title but the van would. You are in essence selling the assets to the business if you credit owner loan or contributing the assets at fair market value if you credit owner contribution. For example:
    Step 1 - create the appropriate accounts under chart of accounts
    Step 2 - determine value of items
    Step 3 - make the journal entry

    Debit Autos 22,500
    Debit Equipment 25,000
    Debit Office Equip 2,500
    Credit Owner (loan or equity) 50,000

  • Studio208Studio208 Member Posts: 4

    Thanks heaps Mike for converting what I see as quantum physics into plain simple english. As a side question to your answer, where you mention - Credit Owner (loan or equity)
    Is Loan / Equity the same or would I enter the $50 k as a "loan" the same as if I was entering a personal loan to the business whereas if I gave it to the business it would be the equity the business has in it's own right, if that makes any sense.

    Either way, thank you again for your clear concise answer to my first post!

  • MikegMikeg Member Posts: 299 ✭✭✭

    Studio208
    No problem. A loan should be used if you intend on paying yourself back. Similar to any other loan. Equity is viewed more as an investment in the business. Hope that makes sense.

  • Studio208Studio208 Member Posts: 4
    Thanks again Mike, and yes explained clearly so us mere mortals (kinda) understand.
  • ckeen_1244ckeen_1244 Administrator Posts: 45 admin

    @Mikeg The hero! :D

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