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Posted by Sharif on September 14, 2007, 3:24 pm
Please log in for more thread options > Hi, Sharif.
>
> Fred's right: It's an investment, an asset, to you.
>
> "Company" is an imprecise term in this case. Is this a corporation? Or a
> partnership? Or simply a sole proprietorship owned entirely by you?
>
> If it's a corporation, did you buy shares of stock? Or did you lend money
> to the corporation - or did you simply contribute to its capital? Even if
> you own ALL the shares, the corporation is still a separate "person" and its
> expenses are not your expenses.
>
> If it's a partnership, who keeps the books for the partnership? This check
> increases your investment in the partnership (an asset to you); when the
> partnership spends the money, it becomes an expense to the partnership, not
> to you personally, and your share will be allocated to you at the end of the
> year, along with all the other partnership transactions.
>
> If it's just your sole proprietorship, then there's nothing deductible about
> it - yet. You've just moved cash from your left pocket to your right. When
> the money gets spent (out of your ownership and control), then record an
> expense - or a different asset - depending on what you spend the cash for at
> that time. Until then, it's just YOUR money sitting in a different pocket,
> waiting for YOU to spend it.
>
> If you keep formal books (or a separate Quicken "file") for your sole
> proprietorship, then record this check as an addition to that investment
> (Sharif's Car Wash, or whatever). And then, in the company's file, make a
> mirror entry creating or increasing your capital ("Owner's Equity"?)
> account. It's not an expense until the company spends it. Until then, it's
> Cash, a company asset.
>
> But you cannot create a deductible expense just by moving money from one
> pocket to the other.
>
> RC
> --
> R. C. White, CPA
> San Marcos, TX
> (Retired. No longer licensed to practice public accounting.)
> r...@grandecom.net
> Microsoft Windows MVP
> (Currently running Vista Ultimate x64)
>
>
>
> >> It's an expense only if you think you'll never get your money back, in
> >> which
> >> case why did you invest?
>
> >> It's an asset. Create an asset account, and process the transaction as a
> >> transfer.
>
> >> --
> >> Regards,
> >> Fred
>
>
>
> >> >I recently withdrew an amount of money from my checking to invest into
> >> > my new business (capital) ... what category of expense would that fall
> >> > into in Quicken?
>
> >> > Thank you.
>
> > Well honestly I didn't plan on getting it back, it was my own
> > investment into my company and I don't expect it to be paid back to
> > me, I'd rather the company keeps it. That is why I asked how to
> > categorize it as an expense.
Thanks so much for clreaing all that up.
Right now I recorded the investment in the quickbooks file in a
"Owner's Equity/Capital" account. And in my personal Quicken file, I
made an asset account with the Company's name and recorded a payment
to it for the same amount as the investment.
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