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Raw Material - From personal use to business use

ClaudineClaudine Member Posts: 1

Hello! I am starting a small handmade business (sole prop). I work with fabrics. But what if the fabrics I will be using are something I've had way before the business started, and was originally intended for personal use? I'd want to use them now for business purposes as it's better than buying a new one. I am just not sure how to account for that. I still have records how much I bought it for. Thank you. I am new in both business and accounting (no background).

Claudine
BC, Canada

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  • JulianPJulianP Member Posts: 1,002 ✭✭✭

    Hey @Claudine !

    Since you still have the records associated with these items, what you can do is record the transaction(s) in your Wave account and mark it as "Owner Investment/Drawings". The reason being is because "Owner Investment/Drawing" is a category used to keep track of the money you pay into and take out of your business.

    When you pay for a personal expense from business funds, you'll bookkeep those transactions to owner investment/drawing to indicate that you took money from your business. When you deposit personal funds into your business, this category allows you to keep track of how much you've invested.

    However, since you already used the materials for personal use, I suggest reaching out to a professional CPA to ensure your books are accurate.

    If you'd like to learn more about recording personal transactions in Wave, feel free to check out this Help Center article.

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