How to categorize a business acct reimbursement for a credit card CAPITAL expenditure?

soumoulou

I have Q Classic for Windows Version R53.26. I have a (1) a business Q Account for my rental property business, (2) a personal credit card Q Account (for an Am Express Card), and (3) a Q "Property & Debt Account" (set up to reflect the capital expenses for rental houses owned by my rental property business). My capital expenses are usually directly paid from the business account and categorized in the category column like this: "[House# One]". For example, my business account pays a roofer for a new $10,000 roof and, under the category column I enter "[House# One]"; therefore, my business account is debited $10,000 and my "Property & Debt Account" increases by $10,000.00 (to reflect this capital expenditure). No problem! But…

But, what if I pay the roofer $10,000 out of my personal credit card account? Then, of course, my business account will need to reimburse my personal credit card account this $10,000 (to satisfy the IRS). What is the best way to categorize these transactions?

This is how I handled it: First, after using my credit card to pay the roofer, I debited my Q credit card account $10,000 AND, under the category column, I entered "[House# One]; —this caused my "Property & Debt Account" to increase by $10,000. As a final step, I entered $10,000 in my business account as a Transfer (TXFR) AND under the category column, I entered "[AMX Credit Card]" which caused my Q Credit Card amount to be reduced by $10,000.

Is there a better way to do this?

Thanks!

NotACPA

How are the tax returns for the business filed? On their own, or as part of your tax return?

If part of your tax return, then the IRS doesn't care which account things were paid from … you and the business would be a "single tax entity" … which made your multiple entries unnecessary.

volvogirl

That's right as long as you actually made the transfer happen at your bank from the business account to your personal credit card account.

Boatnmaniac

@soumoulou -

This is how I handled it: First, after using my credit card to pay the roofer, I debited my Q credit card account $10,000 AND, under the category column, I entered "[House# One]; —this caused my "Property & Debt Account" to increase by $10,000. As a final step, I entered $10,000 in my business account as a Transfer (TXFR) AND under the category column, I entered "[AMX Credit Card]" which caused my Q Credit Card amount to be reduced by $10,000.

That is exactly how I would have done it (provided you actually did a transfer between the credit card accounts).