How to claim expenses back

billtlee

Hi all,
I have been recording my expenses in wave apps using cash on hand before I made any deposits into a bank account. So, I have been running a negative balance for a few months. I have recently made a deposit into a bank account and would like to withdraw money from the business account back to my personal account covering the expenses I have entered into the system. I have a few questions.

1. Am I using the system correctly to track my expenses?
2. What is the best way to record that in waveapps? If I record a cash extraction of the expenses amount from the account, the accounting will not be accurate.

Thanks in advance

Bill

Mikeg

Bill,
When you recorded expenses for your business that you paid personally, the offset should be to owner drawing/contribution. You would not use the cash on hand. By crediting owners equity you are saying that you invested in the business. When you say you made a deposit, is that from a sale? Any cash that you pull out would reduce you equity in the business, you you would debit owners drawing and credit cash for the amount paid to yourself. Hope that makes sense.
MikeG, CPA
www.mgfinancial.net

billtlee

Thanks Mike! So, if I have already classified all those pass expenses as cash on hand, is there an easy way to change them back to owner contribution? I.e., what can I do at this point to mitigate my mistake?

Mikeg

billtlee,
The easiest way is to do a journal entry to move the balance of cash on hand to owners contribution. So let's say there is a balance in cash on hand of -1,234.56. You would debit cash on hand for 1234.56 and credit owners contribution for the same amount. Add a description of something like "To move expenses paid by owner". That would be the quickest. There is no way I know of to change the payment account in bulk. If there are not that many transactions then, you could go to transactions page, click on each, change payment account to owners equity. Repeat for each transaction.
Mike G, CPA
www.mgfinancial.net

billtlee

A follow up question. So, if I am sending in receipts to wave apps, I should select owner investment as the payment account? So, instead of a withdrawal, it'd be a deposit and later I'd do a bulk draw to cover my expenses?

Barsin

Hey @billtlee

The answer is yes. If your expenses were withdrawn from a personal account outside of your business then the account should be classified as owners investment/drawing. Then you would categorize the expense accordingly.

If your business however makes a payment that is personal (i.e you use your business card for a Starbucks coffee) you would categorize that as a Personal expense, then owners investment/drawing.

Keep in mind my examples above use a cash on hand account because that's what my test account defaults to. So ignore that part and use whichever payments account your business uses.

billtlee

Thanks for the reply! That's how I am doing it. So, how do I record getting reimbursed for these expenses when I want to draw from the company?

JordanD

@billtlee once you have completed the steps above, to track the actual reimbursement owed and paid to the correct party, you can use the steps in this article: https://support.waveapps.com/hc/en-us/articles/115005928103-How-to-account-for-reimbursements