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How to enter expenses paid with personal funds

Sometimes you have to pay a business expense from your personal bank account.  This is common when first starting your business before you get a chance to open a business account and it’s ok as long as you don’t make a habit out of it.

Do NOT connect a personal account to your books!

An easy way to enter this in QuickBooks without connecting your personal bank account is by creating a zero-net expense in QBO.

1- Create a transaction in QuickBooks like you normally would

2- Add a second line with the same amount as a negative and posted to your Equity account (e.g. Owner Investment).

The total expense in the bank register will be $0 so it won’t change your business bank balance, but the amount of the expense and the increase in your investment in the business will be reflected.  You can mark this expense as reconciled when doing your monthly reconciliation.

The process is the same in other software such as QuickBooks Desktop or Xero.

The video below demonstrates the steps:

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