How to categorize my credit card payments other than "income"
kelli1b
Member Posts: 1
I have a small relative new home based bakery. I do everything by one credit card, no business checking account yet. Here's the problem, when I make a payment to that credit card for money owing, it shows up as income. So if I have $1000 in sales and have made $1000 in credit card debt payments, it shows I have $2000 in income. I've tried to apply the invoices received to those payments but they aren't the exact amounts so this option doesn't work. If I receive $200 in invoices but only made $100 payment to my credit card, then an invoice doesn't get the full payment applied to it. How can I show that the credit card payment is NOT income?
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Hey Kelli1b,
This article explains how credit card payments are handled in Wave. Using the "Transfer" feature, you can show that funds were moved between accounts so that they aren't counted as income or expenses.
In your case, though, it sounds like you're paying off your business card with your personal bank account which is a little tougher to account for, especially if you don't have your personal bank account connected to Wave. We won't be able to use the Transfer feature here, but I do have a workaround: Every time you pay down your credit card, create a journal transaction that debits your credit card and credits Owner Investment Drawings. This will reflect the fact that you are using personal funds to pay down the balance.
Once this journal transaction is recorded, it will be necessary to delete the original payment transaction pulled in by your credit card, as it will have already been accounted for.
To simplify things moving forward, you may want to open up a separate bank account for your business. It doesn't have to be something that your bank refers to as a "Business Banking" account, it just has to be separate. This will simplify your bookkeeping and make reconciliation as straightforward as possible.