Hi, Just wondering about how to manage the following.
We often pay with our personal credit card for purchases for our business. We don’t claim reimbursement. But need to charge the cost to the business. I have looked at using Expense Claims but not entirely sure that , that is the correct way to account for the transaction. I am wondering should I just journalize the transaction (max 12 transactions per year), I also realize this is not a strict Manager enquiry. Any thoughts would be appreciated. (Trust this all makes sense)
Many thanks
Grandpa
If you are a partnership (or LLC that has members), You can set up capital accounts for each member. When you enter an expense report it can then increase/credit the partners/members capital account rather than coming out of cash. You can additionally set up an expense report payer for the same person if needed for a situation where you do reimburse rather than add to capital.
That is not recommended. You sacrifice visibility and reporting options.
Yes, it is. It goes directly to functionality of the Expense Claims tab.
To add to what @alasdair has written, you have choices, depending on your legal form of organization and the setup of your chart of accounts. All these are described in the Guide about expense claims: https://www.manager.io/guides/6898:
If you have capital accounts for members/partners/owner, those persons will automatically show up as expense claim payers. Expenses entered will be automatically credited to their capital accounts. The advantage is that you do not need to define expense claim payers separately. The disadvantage, though small, is that you will not see these claims reflected in the Expense Claims Summary report. Instead, they will be reflected in the Capital Accounts Summary.
If you are a proprietorship and are using simplified equity accounting (https://www.manager.io/guides/6971), you will need to define expense claims payers. Then, if you do not want to reimburse, you will need to clear the Expense claims liability account periodically with a journal entry, debiting Expense claims and crediting Owner’s equity. This might be monthly, quarterly, or annually to suit your needs.
You can also mix the two approaches. This would be suitable if you usually allow the expense to stand as an additional contribution of capital, but anticipate eventually wanting to reimburse. This decision can be made later. That is, you could start with the capital account approach and add separate payers if necessary in the future.
Thanks guys, most helpful. As you have probably guesed I’m no accountant. I had read Use expense claims | Manager but wasn’t sure whether to use it. Many thanks.
Grandpa