How to manage personal transactions for a new business start up?
kaloa
Member Posts: 2
We spent in excess of 17k from our personal accounts last year, in start-up funds for our business in 2019. This was not one big investment but 100's of small ones. I did not understand why but understood that I should categorize these as income to the business. Now, I do not know how to fix the fact that the business looks like it made 17k more than it did. These were of course 'owner investments' Not really income. Reading more, it looks like this only works if you use the person accounting in wave also, I do not.
I'm trying to recategorize this as 'owner investments' so at least it would be more accurate but I see no way to do so.
If I look at the individual transactions I have categorized as 'owners personal funds to business' (how I set it up to clarify it for myself) I see that there's the ability to change the 'Category' From 'Income'> 'Owners Personal funds to Business' To 'Equity Accounts'> 'Owners Equity'. This looks great until I look at the Profit and Loss and there is NO Category to show that Owners contributed anything.
Do I have to go add 16 pages of individual little expenses to offset the 'income' to the business? What do I do?
Please explain in detail how to fix the problem. Thank you in advance.
On a side note: I know I used to be able to change categories under the old system. Now I cant, I was in the middle of sorting all this out in the fall when the whole system was changed overnight and honestly I threw my hands up in disgust and left it. Now it's tax time and I have no choice but to deal with this. I'm beyond frustrated that this 'update' was done in this manner. With no prior notice, no options to go use the previous system etc.
Comments
How were they entered?
Here is what I would do (and I get this from clients all the time)
Get a back up copy of what those 100's of small items were. Now make a journal entry that summarizes
Debit - Whatever expenses or assets they paid for
Credit Owner Contribution
You will have multiple debits with just one credit I assume
Mike,
Thank you, The vast majority were remodeling expenses to get an apartment ready for vacation renters.
So if I understand what you are saying I should make one 'journal entry' (not a CPA I'll have to figure that out! lol) that will offset this 'income' and categorize it as 'remodeling' expense? Is that correct
Thanks again!
I would actually delete what you did and start over. That way it's clean. To do a journal entry go to Accounting/Transactions/top right More/Journal Transaction
Sounds like you are making capital improvements so I would be sure to have an asset account for Improvements