Balancing sub accounts

6

If I understand what you did, @CollectThatComic, you don’t yet have things quite right in your mind. (Sorry if that sounds like I’m questioning your sanity. But accounting does sometimes make us insane, doesn’t it? :wink:).

For future reference, when you have questions, it is often better to show screen shots of the Edit screen rather than the View screen so we can see the accounts you actually selected. But no need for that now.

The steps when paying a company expense from personal funds are straightforward:

  1. Since you are not using Capital Accounts, you will first need to create yourself as an expense claim payer under Settings. This establishes your individual subaccount. You do this only once. If you had a capital account, you would automatically be an expense claim payer.

  2. Enter a New Expense Claim. Select yourself as Payer. Allocate the transaction to the appropriate account. This will usually be one of your ordinary expense accounts or Billable expenses, but it could be others. In addition to debiting the transaction to the expense account (if that’s what you chose), this will credit the transaction to the Expense claims liability account, because the company owes you money.

  3. Clear the Expense claims account periodically by either of two methods:

(a) Reimburse yourself from a company bank or cash account using Spend Money. Allocate such a transaction to Expense claims and your personal subaccount. You would do exactly this same thing if an employee spent his/her own money on a company expense, such as paying for travel. OR

(b) Since you are a sole trader, you can clear Expense claims to Owner Equity / Investment using a journal entry, debiting Expense claims and crediting Owner Equity / Investment.

How often you clear Expense claims is a personal preference. I do it at the end of each month in a single transaction for everything that has accumulated. You will most likely want to do it before printing any year-end accounting reports or preparing financial statements (such as before applying for a loan) just to reduce the clutter.

Incidentally, Expense Claims are also a convenient way to enter things like personal vehicle allowances, where no money changes hands, but the expense is tax-deductible. You can also use them to prorate expenses paid from personal funds if your business is home-based (assuming your tax laws allow that).