Tracking business expenses from personal account

[Derrick Ashby]

Mike wrote:

>Hi all, 
>Apologies for my earlier slip of the send button with a nearly blank post,
><cringe> it had to happen on my first post to a new list.... 
>
>I am in the process of setting up a set of accounts for a new company. I will
>be doing many expenses out of my personal accounts, and would like some input
>on what the best way would be to track these. 
>
>I've thought about combining both into the same file, but that's just too messy
>when it comes to taxes and the likes (or is it?). So I have separate account
>files for both. 
>  
>
This is a situation I am working through at the moment. Would it be 
possible for you to open a personal credit card for the sole use of your 
business? Or possibly dedicate an existing credit card to the business? 
That way any business expenses you may have are grouped into one 
account. As far as your business accounts are concerned the credit card 
is a business account, and every month you transfer funds from your 
business cheque account to the credit card. You never enter any of the 
business transactions in your personal accounts at all.

>In theory it's simple - I spend and claim it back from the company. The company
>pays me a lump sum at the end of the month. This is kindof workable by setting
>up 'to claim' expense accounts in my personal accounts and (here's the first
>bit I don't like) entering everything twice - again in the company's accounts.
>This won't balance however, because there are non-expense items included in the
>company reimbursement such as mileage claims. So do I have a non-taxable income
>account for reimbursements? I would ideally like to do a reconciliation to make
>sure that everything is claimed correctly, but that seems impossible purely on
>account balances.
>  
>
If a "mileage claim" is using a personal vehicle for business travel, 
you probably should decide what percentage of your auto costs are 
business, and split those bills between the two sets of accounts. This 
does involve a bit of double entry. If you're paying using the above 
mentioned credit card, or another business account, the personal expense 
is really an Asset Account / Equity: Owner Drawing in the business books 
(not an expense) and an Income: Drawing / Expense in the personal books. 
The same goes for any other personal expense you pay for with a business 
account.

>Surely this must be a common scenario (and I've searched through the archives).
>Is there no simple way to track this? Any suggestions/pointers would be most
>welcome. 
>
>Cheers
>Mike
>
>
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>  
>
Derrick