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MYOB & Quickbooks – Loan Money to the Business – How to Record and How to Re-pay
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Published on Thursday, 07 February 2013 12:09
Example: At the start up my business, I put $3000 of my own money into the business bank account. Obviously I want my $3000 back later when business has made the money back. How do I record or properly deposit $3000 into my cheque account and then later on, how do I reimburse myself?
How To Loan To the business: Set up a new account in the Current Liabilities area 2-XXXX and call it “Pete’s (Your Name) Loan Account”. Set the type up as credit card in MYOB, or choose Credit Card Account Type in Quickbooks. Using Spend Money (MYOB) or Credit Card Charges (Quickbooks), use the new account 2-XXXX as the “bank” to spend from at the top of the transaction window, and the business bank account at the lower account allocation. Use NO Tax code.
How to pay yourself back: When you repay/reimburse yourself - use Spend Money, with the business account for the bank at the top and in the lower section, the new 2-XXXX (Your Name) Loan Account. Use NO Tax code.
If like a many small business owners you have a lot of money moving in and out of the business, this option easily allows for multiple postings. However note that loaning and re-paying adds more work to the bookkeeping, so keep it minimal!
Any personal transactions in or out of the business during the years can be posted against the account also.
It is better not to do anything in the EQUITY or 3-XXXX area as some suggest, unless you have been advised by the business accountant. It will also mean entries have to be entered by Journals, which are less flexible, because you can’t use equity accounts in Spend Money (MYOB) Write Cheques (Quickbooks) and Deposit transactions.
Another reason to keep in mind for not using Equity accounts is that transactions posted to this area can change the ownership percentages, if other partners or shares are involved. There may also be tax implications because of it. So wait until year end and the accountant’s adjustments, or discuss with your accountant/tax professional.
Tell us what you have done – join the conversation about bookkeeping!
