How to Properly Book Investment into New Business with Account from an Existing Business
Lorenzo
Member Posts: 19
Hi,
So I've recently open up a new business. I used a credit card for my current Sole Proprietorship to open the new company, because of course, I have no accounts for the new company yet.
What is the proper way to book this? From the point of properly categorizing the expense in my Sole Proprietorship, to properly booking this as an Owner Investment in my new business?
The credit card will never be used again for the new business once I have a proper bank account opened.
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Hi, @Lorenzo.
Do you intend to get this money spend on your new business paid back to your old one? If it's essentially just a donation from one business to the other, you'd categorize it like this:
On the original business: An expense to your credit card categorized to Owner's Investments/Drawings
For your new business: An income transaction to Cash on Hand categorized to Owner's Investments/Drawings.
If you're not just taking out cash for your new business, but paying expenses directly, you'd do it following these instructions. You would just be using your first business instead of your personal page.
Thanks @Alexia I am still in the process of getting the business bank account open. Once that's done, I will use the instructions above and let you know if I have any questions.
Let me know if you run into any obstacle, @Lorenzo! I'll be happy to help out!
No problem, figured it out thanks @Alexia
Happy to hear it, @Lorenzo!