Categorizing transfers between my corporations
johnt
Member Posts: 5
How do I categorize transfers between my corporations?
- I have a holding corp and an operating corp
- I have added both corps to my Wave account
- OpCo dividends up to HoldCo
- HoldCo transfers money back down to OpCo as needed for expenses.
- For example, when OpCo gets a cell phone bill for $50, HoldCo transfers $50 to OpCo and then OpCo pays out $50 to cover the bill.
How do I categorize the transfers for each corporation?
Will this connect the debit from one corporation with the credit to the other?
Will this be treated as an internal transfer and not expense and revenue?
0
Comments
So before our update we realized that moving these transactions between businesses was not an ideal way to operate your books.
We typically advise the best practice is to keep purchases within each company's bank accounts separate from one another, but of course this is completely up to the business owner themselves.
To show a payment from business A to business B, you would need to categorize it as an Owners Investment/Drawing depending on the account you're in. In my example, I'm using a cash on hand account, but you'll be using whatever your business checking account you use.
Business A account pays for business B expense.
The transaction should look like this:
Make sure your business payment account is selected under account then categorize as Personal > Owner investment/drawing.
On the other side of the transaction, business B, you'll want to format it as such:
The income came from an owners investment and was selected to an expense account. In my example I used office supplies.
We've learned that this is the proper method for showing this transaction, as opposed to the classic version which simply moved two transactions between two businesses, but never actually reconciled for both accounts.
Hope this helps.
It is very disappointing that you removed this function and left us to do a really clumsy workaround.