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Personal Credit Card Transactions, Paid Off with Personal Account

MKosecMKosec Member Posts: 2

Hello,
When first establishing my LLC, I used a company credit card for personal transactions. (Yes, aware this is a bad practice and it has been discontinued.) I carefully tracked the personal and company charges, and paid off the credit card from different accounts...ie I paid the personal portion of charges from a personal checking account, and the business portion of charges from the business checking account.

Now that I'm set up on Wave all of the credit card transactions have imported. I'm thinking the personal charges were not "Owner's Draw" since they were paid off from my personal account. In other words, other than being on the credit card statement, the business never "saw" this transaction. Thus, I should just delete the personal transactions, correct?

Thanks!

in Accounting Technical Support

Comments

  • Michelle_AMichelle_A Member Posts: 45 admin

    Hi @MKosec! We actually have a handy help centre article on how to record these kind of transactions should you use a company card for personal expenses and vice versa: https://support.waveapps.com/hc/en-us/articles/208622836-Handling-business-expenses-with-a-personal-bank-account

    In saying that, I get what you mean in this situation when you say the business never "saw" the transaction. You could always recreate these personal transactions in your Personal profile so that, although they no longer appear in your business profile, you can still ensure they stay recorded!

  • MKosecMKosec Member Posts: 2

    @Michelle_A Thank you for your response. I did see that helpful article, although it didn't precisely explain my situation. Thank you for your additional response; very helpful!

  • evieevie Member Posts: 3

    I'm also trying to figure out something similar. I've been paying business expenses on personal credit card and reimbursing myself.

    I read the instruction sheet that said to make a separate ledger entry for each expense by hand! This seems totally cumbersome. Also I don't understand just recording it as Owner's Draw. How will I know what tax category these expenses are when I go to do my taxes?

    Also, how will I double check that the owner's draw is correct? Relative to expenses, if they're all manually entered? Do I have to toggle back and forth between my personal and business acounts?

    edited November 8, 2018
  • evieevie Member Posts: 3

    How will I know my expense categories and also if my owner's draw is correct?

    edited November 8, 2018
  • JamieDJamieD Administrator Posts: 1,156 admin

    Hi @evie. We’re using owner’s draw here both in the place of a bank account, but also so that this transaction is recorded correctly in your reporting. Owner Investment/Drawings represents value that you have contributed to, or taken from the business. Here, we’re crediting Owner Investment / Drawing. This increases it's balance, and indicates that we have used our own funds to purchase something for the business, which is a contribution to your business from you, the owner.

    Just to let you know, you should be able to add the Sales Tax as a line item as displayed in the article listed above - however, as of right now, adding a Vendor to a specific journal transaction is not possible, although we are working with our development team to see if this is something that rolls out in the future.

  • evieevie Member Posts: 3

    Hi JamieD, this doesn't really answer my question.

    My question is... let's say the owner's draw is for a meal or a travel expense, like an airplane. Then I reimburse myself "owner's draw." when I go to do my taxes, I will have a sum of "owner's draw" amounts in my business acount, but they won't be separated into the tax categories I need, like meals, travel, etc. How will I know?

    Also, do I have to manually type each one in? That's most of my expenses. what if I make a mistake? How will I know?

    edited November 8, 2018
  • JamieDJamieD Administrator Posts: 1,156 admin

    @evie I hope this answer gives you bit of a stronger insight on how to account for this in Wave;

    A. If the transactions are personal, there currently wouldn't be a need to have them in Wave, since you are only keep track of accounting for your business.

    B. Owner's Draw refers to money being taken out of the business -- so in the case of paying yourself, then this is when you would use Owner's draw.

    C. If the business transactions were made on a personal card, the transactions would need to be entered into the business though a journal entry.

    I hope this helps!

    edited November 16, 2018
  • joyloo124joyloo124 Member Posts: 4

    Hi @JamieD , I have the same question as @evie

    Can you clarify more on "C. If the business transactions were made on a personal card, the transactions would need to be entered into the business though a journal entry."?

    How to do journal entry for business transaction made on personal card/account?

    Thank you.

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