How do I complete transfers to and from bank accounts not linked in Wave?
BV00
Member Posts: 13
I have a concern regarding completing transfers to and and from accounts that are not, and cannot be linked to my Wave account. I periodically transfer funds from one of my bank accounts to someone else's account. However, in Wave, due to the fact that such an external bank account does not belong to me, and therefore cannot be linked to my Wave account, I cannot complete either end of these transactions in the Transactions tab, whether depositing money into or receiving money from the account. As a result, the transaction is left either as an "Uncategorized Expense" or "Uncategorized Income".
Even if I make a journal transaction manually and create a new account in my Chart of Accounts to represent the destination bank account, Wave can only interpret this as anything but a transfer. It only recognizes that created account as some sort of income or expense account. My only concern is to complete either end of the transfer transaction.
How can I let Wave know how to recognize an external account in this situation if it can't be connected or linked? From what I understand, I can only link a bank account if it belongs to me. Any clarification would be much appreciated.
Comments
@BV00,
If you are transferring funds to an account that does not belong to the business then should it not be categorized as some sort of expense or due from? Assets and Liabilities posted on the balance sheet should be owned or owed by the business.
Hello Mike. Thanks for the response. I understand that due to the fact that the account does not belong to the business, the transaction should most likely be categorized as an expense and placed in some sort of expense or liability account in Wave. However, because the funds themselves being transferred are not for the purpose of running the business (a business expense), is the transfer transaction still categorized as an expense/ liability? I really appreciate your help.
@BV00,
Depending on if the funds are expected back. If they are, then I would set up a liability. If they are not, then I would categorize as Owner Draw or Distribution (an equity reduction).
I see. In my case these transferred funds are not expected back in any form, so setting up an Owner Draw, or equity reduction/investment account seems to be what I need in this situation. Thank you very much for your help.