company dorector's personal Credit Card - how to track/account for in Company gnucash?

Buddha Buck blaisepascal at gmail.com
Mon Jan 23 11:16:30 EST 2017


On Mon, Jan 23, 2017 at 10:52 AM Mike or Penny Novack <mpnovack at mtdata.com>
wrote:

> On 1/23/2017 6:44 AM, __ wrote:
> > we have a director of the company who has a personal credit card which
> > in 90% of payments is being used for company expenses.
> >
> > generally I'd put is as a sub-account of that person's expenses (with
> > is a liability account)
> > My challenge is that I want to track all movements of that Credit Card
> > even though some of which are non-company related personal expenses.
> > Is there any way to do this right?
> >
> > looking forward to suggestions
> I am not an accountant. I think the CORRECT way to handle this is to
> forget for a moment that this is one of the directors. Treat it just
> like if any other employee of the company used personal funds for a
> business expense and so had to put in for a "reimbursement". The fact
> that a credit card was used (as opposed to a check or cash) not relevant.
>
> This isn't quite the same situation as when the proprietor of a sole
> proprietorship or a partner of a partnership does it (and so there is a
> "drawing" account). In that case, SMALL (incidental) amounts might be
> treated as a "negative draw" (for really large amounts, best consult a
> professional, as might be considered "an additional investment")
>

While I in general agree with Mike's approach, I don't think it answers
__'s question. Personally, I think that the correct way to do what __ is
asking to do (track all transactions of the director's personal credit
card, including personal transactions) is "DON'T".

The best solution, in my opinion, is to get a company credit card for the
director to use for business, or if that's impossible because the company
credit isn't as good as the director's, for him to get a separate card for
business use.

Failing that, forget about tracking all use of the card (after all, it
doesn't belong to the company), and treat it as reimbursements as Mike
suggested.

If you are really insistent on tracking all uses of your director's
PERSONAL credit card, then I would seriously think about how the
transactions are going to look:

1/1/2017 Buy plane tickets to conference (Business)
  Liability:Director:CC Cr. $1000
  Expenses:Travel Db. $1000

1/2/2017 Buy lunch (Personal)
  Liability:Director:CC Cr. $30
  ?????  Db. $30

1/3/2017 Reimburse Director for plane tickets by paying CC company
  Assets:Checking Cr. $1000
  Liability:Director:CC db. $1000

1/4/2017 Directors pays CC bill
  ????? Cr. $30
  Liability::Director:CC Db. $30

I don't know what sort of account is represented by ?????. I'm tempted to
say it should be "Liability:Director:CCPersonal" or some-such. If these
aren't the sorts of transactions you envisioned, think about the ones you
do expect -- perhaps the company pays the whole CC bill, in which case the
personal expenses should be counted as pay (perhaps extra pay) to the
director, etc. Perhaps the director is expected to pay the company for
those personal expenses on the effectively-company card. But draw up a list
of expected transactions and try to figure out where the money comes and
goes.

Mixing business and personal expenses on one credit card that is tracked in
the business's accounting sounds like something that will make things
interesting for an auditor. If you are paying for that auditor, they get
paid by the hour, so "interesting" usually leads to "expensive", even if
there are no problems.


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