Handling business expenses with a personal bank account
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Handling 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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the previous version of WAVE, made this easier. I have one checking account that I use for both business and personal. I had made two WAVE profiles and would just need to transfer income and expense transaction between the two. Now, with this new version, there are more steps. I may need to find another accounting tool
Thank you for the feedback @DJPETER, and I'm sorry to hear that. I will pass this along to our Product Team.
OH MY GOD. No way. This is waaay too many steps. The last version made it so easy to just click move to personal, or move to business and I could verify it in my other account. PLEASE PLEASE go back to that. This is a terrible move. Specially for small business owners like me. I loved that aspect of the personal and business accounting. I use biz account to pay for personal and vice versa. Please go back. Im not an accounting person. Debit and journal entries and all this extra stuff makes me cringe. PLEASE PLEASE PLEASE add the feature you had before. PLLLLLEEEEAAASSSEEE!!!
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."
Agree! very unfriendly change to the system! WHy on earth would they do this!
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.
@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
@Erik nice, that looks much better!
@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?
@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?
@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.
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?
Or to another business...
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.
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.
@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.
@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.
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.
I cant believe you changed this without warning. We run two small businesses from our personal account. It used to be we could move the transaction into the appropriate business. Now we cant. Worse thing is you changed it part way through a financial year and now our records will be kept differently in Wave thus affecting reports etc. Really thoughtless Wave
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?
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
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?
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.
From simple and straightforward to unnecessarily complicated. Disappointed in the changes - definitely not an improvement on Wave's part.
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
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
But I think I will save that joke for a more appropriate time.
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
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!
I would also like to voice my extreme frustration and disappointment with the removal of the ability to transfer transactions between profiles. I think many of your customers are very busy, very stressed business owners. In the ideal world, of course, our bookkeeping would be setup perfectly. However, Wave should consider the small business people who are doing their best, but need some flexibility to make things work. I hope you'll prioritize this feature, because we will have to find alternatives to Wave.
Hi,
I am another user who is frustrated with the new system. Previously we could just tick the transaction in the Personal Profile and choose "move to My Company" where you are presented with some options, and can select the category that is from the company profile, and hit Save. Then it would simply show up in the company profile already categorised. Now it looks more cumbersome, why the change?
Likewise with your "home office" example. I could split the personal transaction, say electricity, have one transaction for 80% of the value that stays in personal, and another transaction that has the remaining 20%, and move that transaction to the company profile. Done! So much easier than now, i'm not an accountant so don't the complexity of MYOB or Quickbooks.
I incur company expenses on my personal credit card, I simply want to move them to the company account for tracking and Wave used to be so good at that, and best of all it is free to do so. I'm not an accountant, this new process worries me that I'll stuff up the accounting.
Edit: I've spent all day 9+ hours trying to do things that I for the last few years would take me 1-2 hours. I can't use this platform anymore, sorry. I don't have time to relearn the whole thing as an accountant. Even simple tasks like selecting 2 transactions and converting them to a Transfer with the button at the top.
As others have said, halfway through a financial year as well was not a great idea. I'd suggest roll back to the old platform and work on the new one with proper QA feedback from users.
I'm assuming it is but thought I would ask to make sure as this is more confusing than I thought it would be.
Would the process outlined in this article apply to purchases made on a personal credit card that were made for the business? I purchased a bunch of start up equipment before I had the business account and business credit card in order. So far I have created a liability account under my business profile of "Credit Card - Personal" and have applied those transactions to it but that is clearly not correct as that makes it look like a liability on the businesses books where is should be some sort of owner's investment.
What it the proper process for accounting for business purchases made on a personal credit card for which I plan to have the business pay me back for with the income it earns?
Thanks