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Xero/Reckon/MYOB bookkeeping – How to enter transfers/ payments from personal account to pay business expenses

images/question.pngA regular client emailed - to check they had entered  transaction correctly - To enter a Transfer of money to pay business expenses in this case, to cover a PAYG payment to the Australian Tax Office (ATO) – they emailed –

I am unsure about an entry I have made and wonder if you can tell me if I have done it correctly.

I had a PAYG for John and at the time there wasn’t quite enough funds in Bus. Acc. so I transferred money from personal a/c to cover.

For the entry I used..              Receive Money

Bank Acc: Bus Acc

Payer:  C personal

Amount: $ ----- 

Method:  Other – then put note in details.

Memo:  Funds transfer from Pers. to Bus a/c

Then I credited  

21410 - PAYG Tax - which is where the payment will come from.

Is this correct or should I have put to something else?

Kind regards

L

Answer –

Good effort – nearly right!

There are 2 transactions to do, just to be clear (and a third one to pay it back later) -

1.  You lend money to Business Bank account –

  1. Receive Money
  1. Top account is Bus bank account, then date, $ etc
  2. Memo – eg “C&L loan to Bus bank”
  3. Lower account is YOUR Personal Loan account – either a number 2 Liability (Long Term), or Equity – but number 2 and set as a CREDIT CARD allows you to use in other transactions like a bank account at the top account

2.  The Business PAYS the PAYG 

  1. Spend Money
  1. Top account is Bus bank account, then date, $ etc
  2. Memo – eg “Pay ATO PAYG” – add name if specifically matches an employee amount
  3. Lower account is the 2-1410 PAYG Tax account

3.  The Business pays you back – if this occurs later (or can just leave as is and business always owes you this later)

  1. Spend Money
  1. Top account is Bus bank account, then date, $ etc
  2. Memo – eg “Pay ATO PAYG” – add name if specifically matches an employee amount
  3. Lower account is the 2 Liability Personal Loan Account

If not clear, email or call for FREE!

DOWNLOAD a FREE Bookkeeping Quarter Checklist to get organised! CLICK HERE

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 0407 361 596 Australia

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Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software
Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software
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