Handling business expenses with a personal bank account

SystemSystem Posts: 256 admin

imageHandling business expenses with a personal bank account

It’s a good idea to keep your business and personal finances separate, but every once in a while you might happen to make a business purchase with a personal bank account. If you need to account fo...

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edited December 9, 2018 in Help Center Discussion
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  • SamdSamd Administrator Posts: 560 admin

    Thank you for the feedback @DJPETER, and I'm sorry to hear that. I will pass this along to our Product Team.

  • joethill81joethill81 Member Posts: 7

    Please please please change this back. So much about the new software that are tremendous improvements but the ability to move transactions to the other businesses is huge miss. I run my own business and rental houses through the software which has been great, but I often have charges on my collection of credit cards that need to be allocated to different "businesses" rather than my primary. Too many beneficial reward bonuses on different types of cards to make it realistic to have a single card for each "business."

  • AnnaMMAnnaMM Member Posts: 8

    Agree! very unfriendly change to the system! WHy on earth would they do this!

  • sunnyt7sunnyt7 Member Posts: 20

    I agree, this is a really poor implementation... and the #1 thing holding me back from switching to Wave. Something like "mark as personal transaction" would be a much better solution.

  • ErikErik Administrator Posts: 194 admin

    @DJPETER @mushpamensa @joethill81 @AnnaMM @sunnyt7 we've just released a feature that allows you to categorize your transactions as being "Personal" in one simple step (after a quick setup)!

    You can read more about it here: https://support.waveapps.com/hc/en-us/articles/360020168332

  • sunnyt7sunnyt7 Member Posts: 20

    @Erik nice, that looks much better!

  • sunnyt7sunnyt7 Member Posts: 20

    @Erik What account would you recommend selecting if the expense has nothing to do with the business? Still "Owner's Investment or Drawings", or something different?

  • joethill81joethill81 Member Posts: 7

    @Erik I still would love to be able to transfer transactions to another business. Any reason why this feature would have been removed? Or am I missing something regarding your solution?

    Also I have added personal as an expense category and just remove from my reports. This seems like a better way to do that but doesn't necessarily help my not being able to move a transaction entirely correct?

  • ErikErik Administrator Posts: 194 admin

    @sunnyt7 Glad to hear it! You could technically still use "Owner's Investment or Drawings", but you could also set up a separate equity account called Personal -- it's up to you!

    @joethill81 the new experience on Wave was built from scratch, and is not simply an update to the pre-existing accounting platform. As a result, we did not take active measures to remove features, but some things, admittedly, did not make it to the updated version. The reason we needed to build something from scratch was so that we could more easily build new features on top of it, including our newly released API integrations, auto-reconciliation, auto-categorization etc.

    While some things were not moved over right away, we were able to pave the way for feature additions moving forward.

    Your method works, but you would be correct in saying that it doesn't move the transaction entirely. Although, if you accounted for your personal expenses according to the article linked in my previous post, those expenses would be omitted from your Profit & Loss report automatically.

  • mushpamensamushpamensa Member Posts: 6

    Hey there. The article you post tells you how to categorize the personal transaction, but it just bunches them into one "personal" category in the business side. It does not move them to the personal side AND you can't categorize them individually into each category in personal side (ex: grocery, health insurance, cellphone etc). From other posts, the only solution is to MANUALLY create each of these transactions in the personal side. Is this really the only solution you all can give us? :s

  • joethill81joethill81 Member Posts: 7

    Or to another business...

    @mushpamensa said:
    Hey there. The article you post tells you how to categorize the personal transaction, but it just bunches them into one "personal" category in the business side. It does not move them to the personal side AND you can't categorize them individually into each category in personal side (ex: grocery, health insurance, cellphone etc). From other posts, the only solution is to MANUALLY create each of these transactions in the personal side. Is this really the only solution you all can give us? :s

  • michael_mmichael_m Member Posts: 1

    I often need to move transactions around between personal and self-employment/business accounts. The previous version was very useful in this regard, however, after this new software change I am unfortunately unable to use Wave and will be transitioning to another bookkeeping software ASAP.

  • tekfranztekfranz Member Posts: 20

    I think I found a simple solution to this conundrum of not being able to categorize personal accounts that come through a business account and business accounts that come through the personal accounts.

    If you have the ability you can just move your personal accounts to your business profile. This will require all your Bank and Credit Cards to be associated with the business profile.
    I agree with keeping the personal and business separate so I would then make categories in the Business Profile like Personal - Groceries, Personal-Meals & Personal-Gifts, etc..
    Just don't use the Personal Profile for any transactions. Only use the Business Profile.

    edited January 6, 2019
  • gabrieltomescugabrieltomescu Member, Administrator Posts: 33 admin

    @mushpamensa joethill81
    The new version of accounting no longer "moves" personal transactions to the Personal account. If you are making personal purchases like groceries using your business bank account, the correct way to categorize this is through Owner's Investment / Draw. Essentially you are making a withdrawal from your business account for personal reasons.

    As result, we no longer support the ability to categorize personal transactions into a sub-category (e.g. Groceries, Personal Gifts) .

    Moving transactions to a different business is a feature we are considering at bringing to our new version of accounting, but I don't have an estimated timeline at this time.

  • gabrieltomescugabrieltomescu Member, Administrator Posts: 33 admin

    @tekfranz You have the right idea! It's best practice and we highly suggest connecting your business bank accounts to your business profile, and your personal bank accounts to your personal profile.

    If you still want to use Wave for personal budgeting, to categorize personal transactions that you make using business funds, then yes you could create separate categories like "Personal - Groceries", "Personal - Gifts", "Personal - Meals" inside your business account. Please make sure you create these under the Business Owner Contribution and Drawing account for proper bookkeeping.

  • JonnyWolffeJonnyWolffe Member Posts: 1

    FFS this used to be so easy, now I need to be an accountant to use it. The man in the street can't sit here posting three-way journals - making things like this non-accountant friendly are supposed to be the whole point of software like Wave. We can debate the meaning of the term "remove" but Wave previously allowed a thing to be done easily and now Wave no longer allows that thing to be done easily.

  • paulsrchpaulsrch Member Posts: 1

    I can't seem to figure this out. I have set up a personal side and a business side. I used by personal bank debit card to purchase some services for my business. As I understand it, I am supposed to be able to click on the transaction in my Personal side and, under Category, select a Business account called "Owner Investment/Drawings" The problem is, no account with that name shows up. I have an account on the business side called "Additional Paid In Equity" - but that doesn't show up in the transaction either.
    Actually, since I intend to pay myself back for those expenses, I want to categorize them as a business liability called "Due to Owner" - which account has also been set up as an expense account in the Business side. But that doesn't show up either.

    So how do I do this?

  • EpsiEpsi Member Posts: 1

    It's terrible to have to go through these by hand. At least allow us to download a csv from the personal account so we can upload it to the business account as business expenses! This is ridiculous - the tediousness of having to introduce the catogories by hand has been replaced by the tediousness of having to introduce full transaction information! It takes less time to use the old version of Waveapps... what a bad business move.

    Please enable a selection of transactions to be downloaded in csv format, at least you give us a workaround to bring them back into the business account without so many issues. Otherwise, many will go to do their accounts somewhere else.

    Many thanks and kind regards

  • embersmithllcembersmithllc Member Posts: 4

    What if I have separate business and personal accounts, do not use wave for my personal account, and also don't want to be reimbursed for the business expenditure on my personal account? How can I track this via Wave?

  • jmandesignsjmandesigns Member Posts: 2

    This was a horrible decision by you Wave. Absolutely horrible. You changed this mid year and as you can see in the posts, have made things so much harder for us. I used to recommend your service, I no longer will.

  • vitlnutritionvitlnutrition Member Posts: 2

    From simple and straightforward to unnecessarily complicated. Disappointed in the changes - definitely not an improvement on Wave's part.

  • mushpamensamushpamensa Member Posts: 6

    Thank you @tekfranz You are the only one that has given me a path to some sort of solution! It's definitely not perfect, beause I am still mixing biz and personal, which is something every accountant tells you NOT to do... but I'll give that a try. I appreciate it.

    to @gabrieltomescu and the Wave Team. You have really made me suffer this year with my accounting. Super disappointed. I will try the suggestion from a fellow wave user, but this is definitely not a long term solution...I'm so torn. I downloaded another software to see if works better form me, but I am sad to make this change because I really liked Wave. As you can see many users are frustrated. If I was the director/CEO of Wave, I would make this a priority to solve. I'm very hesitant to mix my personal and business accounts into the business side, but that seems to be the only thing I can do for now which is such a shame.

    If changes are in the plan, please let us know. I might be able to hold out for a few months, but not much more. If this is permanent I will have to figure something else out.

    Thank you

  • tekfranztekfranz Member Posts: 20

    One use case I would like to highlight is Home Business....Here in the U.S. we can choose to allocate a percentage Home Maintenance and Utilities based on the the square footage of our Office Area to the rest of the home. So for example if my Home office is 10% of my home square footage I can allocate 10% of my Personal Electric bill as a Business Expense. This is often done by an Accountant at Tax time. Another example might be a Cell Phone bill where a percentage is allocated to business from a Personal Cell Phone Bill.

    Creating a strong line of demarcation is important once a business grows, but I would expect most of us Wave users are Micro-Businesses where we do not draw Salaries from our Businesses so splitting Business and Personal so drastically seems a bit in-flexible.

    I would be in favor of allowing the Business Side and Personal Side to work together again and allow any transaction to be assigned to the Personal Profile or the Business Profile, not matter where its source or Payment method.

    P.S. I have been wanting to make a joke how I won't pay my bill if this or that feature is not restored...problem is that the software is free...so i can't withhold payment :wink: But I think I will save that joke for a more appropriate time.

  • tekfranztekfranz Member Posts: 20

    One use case you might want to consider is that here in the U.S. we can take a percentage that our Home Office Area takes from our Home and allocate that to Business. So if a home Office takes 10% of our Home we can allocate 10% of certain Home Maintenance and Utility Expenses to Business.

    The same sort of mechanism holds true for Personal Cell Phone Usage. A certain percentage of Personal Cell phone usage can allocated as a Business expense. This is mostly done by an Accountant at Tax Time.

    I agree that a clear Line of Demarcation between Business and Personal Expenses is important once a business grows, but for small business a strict separation of all accounts seems a bit inflexible. Most small businesses do not draw Salaries so often Business and Personal Expenses are run together. I would assume that Wave is targeting micro-business like us that run our businesses from our homes.

    I would be strongly in favor of allowing the Business and Personal Profiles to work together again by allowing transactions from any source or to be classified as either the Business Profile or Personal Profile. Also the ability to transfer between business and personal accounts is important.

    P.S. I have been wanting to make a joke for a little while about how I will withhold payment if Wave doesn't change this or that feature...but I can't because Wave is free :wink: But i think I will wait to make the joke till a more appropriate time.

    Thanks again for the wonderful accounting software that you work so hard to give us!

    edited February 2, 2019
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