Personal Expenses Paid With Business Credit Card

Not enough information.

What country are you in? What is your business tax structure?

For example, I have an LLC. The profit in an LLC gets assigned to individual members and is taxable to them directly. In my case, so long as the personal use is not coded to an expense account and deducted as a business expense, and so long as I track what personal use each member accumulated (I use a sub-account I created under each member's equity account) the accountant seems satisfied. It is not the same with other tax structures. Look in the QB helpfile under 'personal funds and business funds' and also check with your accountant.

I have always posted personal purchases on the company card to either Due to Owner, Owner's Draw, or Shareholder Loans accounts.

Shareholder's Loan Receivable is the proper way to record these purchases. CRA (aka Rev Canada) gives you a certain time span to repay the amount before it becomes taxable income to you, personally.

I don't know what the IRS or other tax authorities allow but it is probably similar to Canada's.

When you buy company items with personal funds do you apply it against Owners Draw?

When I go to pay this credit card from company funds, how will this affect my accounts?

Thanks

Which is it, company funds or personal? You post flip flops.

I know what to do with personal purchases on the company credit card, thanks to the responses.

I am going to charge it against owners equity.

I am wondering if I should credit the owners equity account when I purchase company items with personal funds.

Essentially, yes. But this is most appropriate with sole proprietorships and general partnerships. With a corporation, generally the owner is reimbursed the out of pocket expenses either with a petty cash disbursement or on their paycheque. The personal purchases on a company charge card can either be applied against an Owner's Equity or Drawing account or a Shareholder Loans account, or the amount may be deducted FROM their paycheque.

When I put through purchases made with personal funds or on a personal credit card where the balance is NOT paid by the company, I make an expense report, breaking down taxes and net amounts, and categorizing each purchase.

I then set up the owner as a vendor, and submit the expense report like a bill from the owner. Once per quarter or year, I make a G/J adjusting entry clearing the bills and offsetting the A/P amount to Owner's Equity. This way the owner is showing the amount of cash he/she has spent/input into the company for either expenses or cost of goods, and their Equity in the enterprise is increased.

When I am entering personal purchases made on a company credit card where the balance is paid by the COMPANY, I enter the business expenses according to their expense categories and the personal purchases go against Owner's Draw. In this way, the personal purchases become a deduction from the Equity. If the draws exceed the funds injected by the owner, then the overages become taxable by the owner.

I must, however, restate as I have in the past: PLEASE CONSULT YOUR ACCOUNTANT.

Yes, or the company can reimburse you with a cheque.