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Business Income received into Personal Checking but transferred to Business Account
FLDave
Member Posts: 3
Hello, I have committed an accounting sin of electronically receiving business income into my personal checking. It was easier for the client as electronic transfer of funds was a hassle into my business account. I did diligently electronically transfer all of these income funds to my business checking. Now I am left to sort out the Wave accounting. In each case when performing a transfer from personal to business, Wave requires the funds to be categorized as Owner Investment/Drawings. This category doesn't reflect that it was income on the reports. Is there a better way or proper way I should be handling these transactions?
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Hey @FLDave! Thanks for reaching out! You are correct - money that is put into the business by a 'personal' account would usually flow through an equity account. Just to see what the best route is here, what transactions do you currently have in your Wave account for this process? Is it just an income transaction from your 'Personal' account? Were the funds received for an invoice you created and sent in Wave, or were they for another type of income? Happy to dive in a bit deeper!
@FLDave,
If you did not use the invoicing, you should make a journal entry to record the sales. Since you have transferred the funds from your personal into the business, then you would debit Owners Draw and credit Sales. I sometimes receive Fees in my personal account. I do not put it into my business, I just record a journal entry to capture the sale.
Thanks Mike make sense now.
Emma, Thanks for the input. Mike pretty much nailed it. I ended up making a journal entry for these funds and "debiting Owners Draw and crediting Sales'. All is well now.