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Wednesday, December 23, 2009

How do I record cash expenses for my business?

First, lets preface this posting by recommending that all business and personal transactions should be processed separately.  If you are operating a legitimate business be sure to use a separate checking account.  Do not mix and mingle personal and business transactions.

To record business expenses paid with personal cash or with a personal debit or credit card record a journal entry.  No matter what software you use, or if by some remote chance you are still doing things on paper, record a debit (left) entry to the appropriate expense and record the total credit (right) entry to Owner Investment, which is an equity account.  In Quickbooks the entry would look like this...

Your debit and credit side of the entry must be equal.  If you are using Quickbooks or other software the entry will automatically balance in order for it to be recorded.

More and keeping business and personal transactions separate.

This material is for informational purposes only and not intended and financial, legal or tax advice. Please consult your finance, legal or tax professional to confirm the accuracy of all information. Quickbooks is a registered product of Intuit.

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