Is an Owner an Expense Claim Payer?

I think I’ve had one of those light bulb moments.

I have been failing to understand that if I (as a owner) was creating expense claims, these were outstanding until they were journaled or otherwise cleared. I understand the need for doing this for employees, but as an owner, it’s just my contribution to making the business run.

I think the problem stemmed from creating myself as an expense claim payer and not utilising the members part of the payer field and selecting my owners contributions capital account. Instead I was selecting my name which had been set up as an expense claim payer.

When I use that, there is no outstanding expense and it becomes a part of retained earnings.

So with the exception of a use case scenario where I wanted to be reimbursed for some particular expense for whatever reason, would it be safe to otherwise say/assume that:

  1. any contributions made by an owner should (generally) always be entered against the owners capital account, and
  2. owners shouldn’t necessarily be expense claim payers

The choices are yours to make. But you seem to understand Expense Claims correctly.

One thing you might consider is renaming Retained Earnings as Owner’s Equity (since in your case it is) and doing away with capital accounts entirely. For a sole trader/proprietor, they are unnecessary. If you do that, you must create yourself as an expense claims layer. And you can clear your personal expense claims to Owner’s Equity. Very neat and easy.

Thanks @Tut, good to know I’m finally getting it :slight_smile:

I like the idea of leaving it as described since a) there is me and the Mrs and who knows what will happen down the track, might bring in a third partner/whatever, and b) under a capital account the clearing of it is basically automagicly done for me :stuck_out_tongue:

Although (and I know it’s me just processing things different ways and I need to unify it) some things are under the capital account and others are retained earnings. I’ll get there :slight_smile: