Hi - I am a beginner at Manager.io and bookkeeping. I am attempting to enter my transactions from 2024 for my startup business. Because I did not yet have a bank account several transactions were made against my personal bank account and credit card. How would you suggest I manage these transactions? I was thinking of making some bulk transactions that aggregate all of the non-business payments but I’m not sure how to categorize them, or which accounts/categories to attach them to. Any suggestions? I’d like to make the reconciliation relatively easy.
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The answer depends on how you intend to use your accounts going forward.
If it’s just a few transactions while you’re starting up then manual entry from owner equity maybe the cleanest
The intent going forward is to keep business transactions isolated to business checking and credit card. However, we have actually a lot more than ‘several’ - we have ~80 transactions, that were made on various credit cards and incoming payments to personal bank account.
Now that I have better records I’d like to
- reconcile the accounts
- eventually zero-out and mark as inactive any personal accounts going forward
For now I have created bank and credit card accounts for each account and allocated the expenses to each one appropriately. However, since I’ve only captured business transactions, the balances etc do not pencil.
I also want to make sure that the money used to pay off the credit cards is appropriately allocated as startup capital to the business, and balanced against business income accordingly.
This will all be much easier once everything is in segregated accounts but need some help untangling things. Can you explain what ‘manual entry from owner equity’ means?
Personally, I think you would be better off to ignore the 2024 transactions and start over for 2025, setting appropriate starting balances. You have made quite a mess by mixing in multiple personal accounts. And once you have entered even a single transaction, you will be unable to delete the accounts.
You could enter all the previous transactions against Cash on Hand (or a similar account) and then create a Journal Entry to zero out the balance against Retained Earnings on the date when you started entering the transactions strictly using the business accounts, making a note that this is the case in the Journal Entry description.
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Manager is a double entry accounting system which means money can not just appear in one account, a balancing entry has to appear in another account.
The transactions before your business account was set up could be entered as journal entries with the balance entry in “Owners equity” (renamed Retained earnings account https://www2.manager.io/guides/6971)
While I know it’s not technically correct I would instead manually enter zero value payments & receipts in your new business account with a balancing line to “Owners equity”. That keeps all similar transactions together.
PS not sure if the old guides have been completely removed now so above link many not work.
Hi, thanks for the replies. I’ve been digging into this and it’s more complex than I had thought.
This is for a solo proprietor LLC.
Basically there are several different cases that I need to handle (with thoughts in parens):
business charge made from personal cc (loan from proprietor to business?)
personal charge made from business cc (loan from business to proprietor?)
business receipt into personal bank (loan from business to proprietor?)
transfer from personal bank to business cc (loan from proprietor to business?)
transfer from personal bank to business bank (startup capital / owners capital?)
transfer from business bank to personal bank (draw of owners capital?)
I’ve looked and I have over 80 payments and 15 receipts and 10 transfers. Thus far all are classified as payments / receipts / transfers and associated to accounts. Some previous threads suggested creating an ‘expense claim’ for things like business payments from personal accounts, but I’d really love to avoid doing that for 80 transactions as I’d have to convert each of them from a payment to an expense claim.
Can anyone provide any other creative ideas on on how to handle this? Vacuumdog suggested a journal entry to zero out the balance against retained earnings but I’m not sure how to set that up.
As noted above, we have multiple cases of overlap, including personal use of business cc and business use of personal cc. We are addressing this going forward but need a clean accounting-reasonable way of balancing this out…
Patch you suggested ‘zero value payments/receipts’ - what does that mean? I’m not sure I understand what a zero value payment is nor what the value is.
I’m wondering if I can somehow set this up as a set of loans (or a single loan) between the proprietor and the business. Is there a way to do this without having to recreate all of the transactions?
Some of the transactions you describe are common and if you just want to enter the start up transactions without accounting for the bank account payments and receipts through Bank & Cash Accounts you can consider the following options. Your accountant will have no difficulty in helping you with the basic accounting principles.
business charge made from personal cc (loan from proprietor to business?) EXPENSE CLAIMS.
personal charge made from business cc (loan from business to proprietor?) JOURNAL ENTRY TO CAPITAL ACCOUNT - DRAWINGS.
business receipt into personal bank (loan from business to proprietor?) JOURNAL ENTRY TO CAPITAL ACCOUNT - FUNDS CONTRIBUTED.
transfer from personal bank to business cc (loan from proprietor to business?) JOURNAL ENTRY TO CAPITAL ACCOUNT - FUNDS CONTRIBUTED.
transfer from personal bank to business bank (startup capital / owners capital?) JOURNAL ENTRY TO CAPITAL ACCOUNT - FUNDS CONTRIBUTED.
transfer from business bank to personal bank (draw of owners capital?) JOURNAL ENTRY TO CAPITAL ACCOUNT - DRAWINGS.
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Ok I made a little progress since my last note.
I realized one error I made was using inter-account transfers for money into and out of the business. So I removed any of those that weren’t between business accounts, and instead used the capital accounts as follows:
personal bank transfer to business bank or business cc: capital account (funds contributed)
business cc used for personal use: capital account (drawings)
So this is cleaner!
So now the only thing left to treat is to properly account for the remaining ~60 payment transactions from my personal credit cards and bank account. What if I grouped them under a single control account and then did some transactions to balance things out? Any suggestions there?
(Hi Tony - thanks for your note - I came to the same conclusion before I saw your note re: the capital contributions and draws)
First think exactly how you will be entering these transaction in the future when you have your actual business accounts.
I would then hand enter the old transactions in the same screen in Manager (to keep them all together).
If some of the purchase would have been entered as a purchase from your business account then
- Create such a purchase in Manager with the correct date and a line item(s) for the correct amount.
- to ensure you can still reconcile that bank account set the
Fixed totalto $0 and enter a line with a negative amount to achieve this. For that line item select the owners capital account or if you are a sole traderOwners Equity
This is functionally a journal entry but entered into the same location as all your other future transactions.
Thanks Patch.
Ok I think I figured out an approach that works for my situation.
I now understand what you are suggesting with the ‘fixed total of $0’. For biz transactions from personal accounts, I am trying another solution, that is basically the same idea, but in bulk. This was the idea suggested by VacuumDog but I didn’t really grasp what it meant it until just recently…
For all of the personal credit cards with business expenses, I created a single journal entry as follows:
date: 12/31/2024
capital accounts (funds contributed) - credit: (total amount of business expenses on that personal CC for 2024)
credit cards - credit card #1 - debit: (ibid)
So this effectively zeroes out the credit card. It allows me to keep the transactions where they were (associated with the personal cc), but the journal entry converts it to a contribution to the business.
For any receipts that came into my personal bank account, I created a journal as follows:
date: 12/31/2024
capital accounts (drawings) - debit: (total amount received in the bank account for 2024)
credit cards - bank - credit: (ibid)
As a result my personal bank and credit cards are now zeroed out and don’t show up on the balance sheet.
Does the above make sense (as a 1 time fix, not as a practice-to-be-continued)? Thanks again to everyone who replied for the suggestions!