Expenses on my personal VISA

MironD123

Just started using Wave and love the platform. Apologies in advance for the basic question and if it's already been answered previously.

I've recently made a purchase on my personal VISA for some office supplies (my personal account is not linked in Wave, only my business account).

I then transferred money from my business to my personal VISA to reimburse for this expense, so I see this transfer in Wave.

How do I appropriately record this transaction in Wave? Does it involve petty cash/cash on hand?

Thanks!

MerlinAccounts_UK

If the transfer you did from your business account was for the exact amount that you paid with your personal visa, and you have uploaded (or saved) the receipt for the expenditure the easiest way to do this is to treat the transfer as if that was the actual original payment for the item bought.

Of course if you want to show a trail for the transaction of spending the money by Visa and then reimbursing then you would need to show a cash receipt (into cash on hand) categorised as owners capital to the value of the transaction, then do a cash payment from cash on hand to the appropriate category that the expense was for. Then, the bank transfer you did can be categorised as Owners Capital (basically cancelling out by contra the cash receipt put in there)

MironD123

Thank you Merlin - yes, I'd like to show a trail for the transactions to ensure it's compliant with my local accounting policies. I think this is like petty cash expenditure.

Can you please describe the step-by-step for me to do so? Really appreciate it!

MerlinAccounts_UK

1. Select Accounting from the left panel of your Wave home screen
2. Select transactions from the drop down list that appeared when you clicked on Accounting
3. The screen will now show a whole host of transactions that you have already entered, and across the top of this screen the first box you see will say All Accounts. Click on this and select Cash on Hand
4. Still staying on top you can see options to add income, add expenses, plus a more option with three additional options on its drop down. If you are entering the payment that you made with the Visa select Add Expense
5. You will now see to the right of your screen a panel headed up Edit transaction details, and below that, a Description box prompting you to Write a description, so populate that with details of what you paid for, then complete the date with the date you paid for the item(s), show it as a Withdrawal and enter the value in the amount box
6. Below this there is the option to categorize your withdrawal - you may need to scroll down a bit on your browser to see the full list of categories that comes up when you click on categorize - choose the appropriate expense heading. If relevant then select "include sales tax", choose the relevant tax from your lust (assuming you have prepared sales tax types) and enter the value/accept the auto calculated value (or create your sales tax type from that pop up window)
7. Add any additional notes you feel are necessary, then click save

Next you need to do an income entry to show that you have in essence loaned the business the money to pay for the above item.

1. Staying on the cash on hand transaction screen, choose add income
2. Write your description in the right hand panel, date it and enter the value
3. Categorize the income by selecting Equity Accounts from the drop down menu and opt for Owner Investment/Drawings - DO NOT include Sales tax in this transaction
4. Add any transaction notes you may wish to save
5. Click save

You will now see on your cash on hand transactions screen both the payment and the income which balance back to zero

MironD123

Thanks for the detailed reply Andrew, really appreciate it.

Is this the standard process for petty cash entries? So if I spent $1k on my personal VISA and want to show that this was from my petty cash/cash on hand corporate account, is this how it's done, or is there a simpler process?

Thanks!

MerlinAccounts_UK

The process I set out is pretty simple really (as you'll appreciate as you become familiar with Wave), takes a matter of seconds for you to process each transaction - it's all about getting the double entry right. If you were using a business credit card it would cut out the need to create incomes to cover the expenses. The only other way to enter onto Wave would be by use of journal entry whereby you debit the expense category and credit the owners drawings account, but unless you feel comfortable with journal entries and confident about what is a debit and what is a credit I'd recommend you stick to the method I outlined above.

MironD123

That's fantastic, thanks. Just so I know, is this the way to do petty cash in Wave?

MerlinAccounts_UK

Pretty much, yes, the only exception would be where you fund petty cash by withdrawing funding from your business bank account, you wouldn't have to create an income from yourself.

If you're happy with the help I've provided don't be shy, give it a vote up and maybe an awesome too :)

8_23

Merlin, I have used my personal credit card to fund inventory. With a 1 year grace period on interest. The Vendor only does Credit Cards or prepaids. How do I handle this accounting? I do have a running total. Should I set the card up as a vendor and enter all the charges and then the payments? Or is there a better way?
Thanks 8_23

MerlinAccounts_UK

Is your business in the form of a sole trader ie not a corporate organisation?

8_23

Limited Liability Corp. LLC.

MerlinAccounts_UK

As an LLC (which is fundamentally the same as a Ltd Co here in the UK) you cannot really treat a personal credit card as a business card. This said, if you're not going to be incurring interest charges on it, and intend to reserve its use solely for your LLC (no personal items to be charged to it) then it would be reasonable to set it up on Wave as a bank account. Payments made with the card can then be entered in much the same way as payments would be entered if you were paying out from cash or your bank account. Payments to the credit card account to clear down the borrowing would just be done as a straightforward transfer from the bank account to the credit card bank account.

8_23

Thank you I have been trying to figure this out. I really appreciate this answer so much.
Have a wonderful day!
8_23

craftygirl

Ok - my question is similar but different! I have both personal and business accounts in Wave. I spend money from both on both (depending on where the money is when I need to spend it). So I just put the same category on personal transaction that was for business - i.e. Office Supplies. Is that an ok way to do it?
And my next question is - if I spend $1,000 on inventory on a Company Visa, but only pay $200 toward the bill - how do I enter that? Is it a Liability?
Thanks in advance.

MerlinAccounts_UK

As you're not using your card as a dedicated business card you shouldn't really set it up on your Wave business. Any business transactions performed using your personal credit card should either be entered in the business by journal, or by using cash on hand to record as cash payments (with a note to say paid by personal credit card). These entries would then be balanced out by an income into cash on hand and categorised to owners capital. If you use your business bank to pay off your personal credit card debt then the payment should be categorised as owners capital.

craftygirl

Thank you. I'll try to get that figured out.

Thanks for taking the time to answer.