New to Accounting and Wave - Quick initial setup questions

DevG

Hi,
So I set up Wave last night and linked it to my 2 business account (Checking, and Savings). During this process I created two new accounts in the chart of accounts, one for the checking and the other for the savings.

I logged into Wave today and I see it pulled in my initial data. Now I have some questions which came up:

1) My bank made a mistake where the first order of checks should have been free. But instead, the check company charged me, there was a insufficient funds fee, and the bank reimbursed me for this mistake. No other transactions exist, yet. Wave pulled all this data in and is waiting for my review. Should I go ahead and categorize each item (bank fees, reimbursements) or just delete them as they are bank mistakes and do not actually affect anything? How would I record the bank fees and reimbursements?

2) I noticed the app created two equity accounts: "Owner Investment/Drawings" and also "Owners Equity". What is the difference? I read that mileage would be recorded as a credit in "Owners Equity". Which one do I use to record my initial deposit into my bank to open the account (Capital Contribution). I'm a single member LLC if that matters.

Thanks for any advice!

James_Hudson

Hey DevG,

When it comes to your first question, as a rule, the more accurately your bookkeeping reflects what happened in the real world, the better! In this case, I would recommend categorizing both transactions instead of deleting them. For the fee charge, I would recommend using an expense account like "Bank Service Charges," and for the refund I would recommend categorizing to "Refund for Expense" and choosing "Refund for Bank Service Charges" from the list that opens.

When it comes to your second question, once again, the distinction between the two accounts comes down to being as specific as possible. Both accounts are equity accounts, and will behave the same way, but they are distinct so that your reports can give you more information. In the case of Owner's Investment/Drawings, this account should be used for any time that you as the owner have injected money into the business, or withdrawn it. Owner's Equity is a little broader, and should be used for entries like starting balances, and as you pointed out, mileage.

DevG

Thanks James. One more thing...I want to record the fee I had to pay to register my business (business formation).

It will be categorized as "Licensing/Fees" as an expense. When I manually enter a new expense, it's asking for a payment account.

I can only select:
Cash in hand
Business Checking
Business Savings

However, the registration fee was paid with my personal credit card before the business was formed. So what do I select for "payment account"?

Alexia

Hi @DevG.

We have an article in our Help Center on that subject. It explains the easiest way to deal with having paid for business expenses out of your own pocket.