Accounting Question

[brian_minson]

<p>I have a marketing and photography background, and my knowledge of accounting is keeping my personal checkbook balanced.<br>

My question is this, I have a business checking account, and lets say it has $1000.00 in it. I want to buy a new Canon 7d, but since I don't have the $2,000 in my business account I was going to pay for the new camera out of my personal checking account.<br>

How do I work this into my business accounting? Am using QuickBooks. Do I pay myself back monthly from the business account until its paid for? OR?<br>

Couldn't find the answer anywhere else online, so I came back to my friends on Photo.net</p>

<p>Brian Minson</p>

 

[mike dixon]

<p>You need to talk to your accountant. If you screw up your accounting, the IRS probably won't accept "but this is what they said to do when I asked about it on a photography website" as a reasonable explanation.</p>

[leicaglow]

<p>Brian, like Mike says. But what <em>I </em> would do is put your money in your business' account as a loan, promissory note, or something. I would leave the money in the business, or draw it back out later. I also do a corporate resolution for capital expenditures of a grand or so, and explain where the money came from (you).</p>

[ccommins]

As Michael stated, I would loan the business the money. You could pay it back in installments or in one lump sum. But keep a paper trail. Example write a check to the company, memo loan to business, same when you pay it back ALWAYS write on the memo what it was for, when tax time comes it saves alot of grief.

[rich_frollini]

<p>I would apply for a Visa business card and purchase your gear with that.</p>

<p>Use it for all business expenses and nothing else. You will then have very good records of all business expenses when it comes time to do your taxes.<br>

Just pull out the statements for each month and there you go...</p>

[kevin_delson]

<p>You r question can not be answered w/o knowing how your biz is structured?</p>

<p>Sole Prop?<br>

LLC? Pass thru-Taxation?<br>

S Corp?<br>

Inc?</p>

[kevin_delson]

<p>Avoid "co-mingling" of funds. This is a red flag to the IRS.<br>

You don't want the IRS to "pierce the veil" of your business entity, (IF) it is an entity.</p>

[martyphotoarts]

<p>Brian,<br>

What you can or should do in this example depends, like Kevin suggested, on how your business is legally registered. If you are a sole proprietor, then all income flows back to you personally and business expenses are deducted on Schedule C. It matters little whether for not you paid for those expenses from a "personal" or "business" checking account. The issue in that case is whether it appears to be a legitimate business expense for your type of business. If you operated a daycare out of your home and bought a 7D, uncle sam may take issue with that as a legit business expense.</p>

[john_lynch5]

If you are operating as a sole proprietor, it makes no difference how you pay for it. The payment should be recorded as an increase in owner's equity. If you want to "pay yourself back", it is an owner's draw (for recording purposes); it has no effect on profit/loss or taxation. On the other hand, if your business is a Corp. or LLC, then you need to record the payment as a loan and pay yourself back (with interest) over whatever period you feel is reasonable. The best way to handle either scenerio is to deposit the funds into your business account and make the purchase from that account. This is especially true if your business is other than a sole propietorship in order to maintain the appearance of an"arms length transaction".

[jaybee]

<p>Follow Mike Dixon's advice. It's the best answer here.<br>

 <br>

P.S. It's amazing, but I never see photography-related questions on the AICPA website. ;)</p>

[kim_johnson1]

<p>If you and the business are two separate entities... in Quickbooks, you would show the business getting a loan from the person. That would be in your your Accounts Payable. Treat it has any other Account Payables bill.<br>

If you want to personally buy the equipment, just do it, but dont show the equipment as business asset.</p>