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Started By
Message
Bookkeeping question for new business
Posted on 2/11/20 at 7:16 pm
Posted on 2/11/20 at 7:16 pm
I just started a new side business with my brother and cousin and we each put up $5,000 to start it. We incurred some costs before our bank account was opened and I am trying to enter everything into quick books to keep track of it. Essentially, my brother bought a truck for $3300, so his contribution to the bank account is $1700. I want to make sure all of our member contributions are coded correctly and give him credit for the $3300 he put in.
What would be the best way to code that?
What would be the best way to code that?
3
Posted on 2/11/20 at 8:10 pm to saints5021
Debit your "vehicles" fixed asset, create a "Due to owner" account with his name on it and credit that
Posted on 2/12/20 at 1:51 am to saints5021
For everyone other than you brother record the following journal entry.
Debit - Cash 5,000
Credit - Equity 5,000
For your brother record the following journal entry.
Debit - Cash 1700
Debit - Vehicle 3300
Credit - Equity 5000
BS should then reflect the following
Asset - Cash 11,700
Asset - Vehicle 3,300
Liabilities - $0
Equity - $15,000
Debit - Cash 5,000
Credit - Equity 5,000
For your brother record the following journal entry.
Debit - Cash 1700
Debit - Vehicle 3300
Credit - Equity 5000
BS should then reflect the following
Asset - Cash 11,700
Asset - Vehicle 3,300
Liabilities - $0
Equity - $15,000
Posted on 2/12/20 at 5:12 am to BeYou
quote:
For everyone other than you brother record the following journal entry.
Debit - Cash 5,000
Credit - Equity 5,000
For your brother record the following journal entry.
Debit - Cash 1700
Debit - Vehicle 3300
Credit - Equity 5000
BS should then reflect the following
Asset - Cash 11,700
Asset - Vehicle 3,300
Liabilities - $0
Equity - $15,000
On a related note, make sure you are carefully tracking partner capital contributions both inside and outside the company accounts.
I see disputes all the time with partnerships were owners are arguing over who paid for what and who is owed what income/distributions. It can become a real nightmare if you do not keep clean records. Plus it is just an administrative nightmare come year end compliance time.
Posted on 2/12/20 at 6:58 am to LigerFan
You’re not going to want a due to owner account if it is a contribution to the company
Posted on 2/12/20 at 8:05 am to JumpingTheShark
What he's saying is that out of the $5,000 they both contributed, his partner put $3,300 towards a truck. At least that is what I am getting out of it. He wants to ensure that his partner is getting his $5,000 contribution recognized since the truck was purchased before the bank account was opened.
Maybe I am reading it wrong and this should be the entry
Cash - $11,700 Debit
Partner A Contribution - $5,000 Credit
Partner B Contribution - $5,000 Credit
Partner C Contribution - $5,000 Credit
Vehicle - $3,300 Debit
Maybe I am reading it wrong and this should be the entry
Cash - $11,700 Debit
Partner A Contribution - $5,000 Credit
Partner B Contribution - $5,000 Credit
Partner C Contribution - $5,000 Credit
Vehicle - $3,300 Debit
This post was edited on 2/12/20 at 8:07 am
Posted on 2/12/20 at 8:07 am to LigerFan
quote:
Maybe I am reading it wrong and this should be the entry
Cash - $11,700 Debit
Partner A Contribution - $5,000 Credit
Partner B Contribution - $5,000 Credit
Partner C Contribution - $5,000 Credit
Vehicle - $3,300 Debit
You're still reading it wrong. From OP
quote:
Essentially, my brother bought a truck for $3300, so his contribution to the bank account is $1700
Posted on 2/12/20 at 8:09 am to TheTroll
quote:
You're still reading it wrong. From OP
His contribution is still shown at $5,000, which is what the OP was stating his wanted shown, and his cash contribution is still shown at $1,700 while his asset contribution is $3,300.
ETA: BeYou has the correct entry that is the same as mine on my second post, I misread what he was trying to accomplish the first go round
This post was edited on 2/12/20 at 8:11 am
Posted on 2/12/20 at 10:31 am to BeYou
This is correct, assuming the OP's brother actually contributed the truck to the entity, as in, went and got it titled in the company's name, etc, so it is now a company asset.
You'd be surprised (or maybe not) how often this last step doesn't happen.
You'd be surprised (or maybe not) how often this last step doesn't happen.
Posted on 2/12/20 at 1:11 pm to LSUFanHouston
quote:
You'd be surprised (or maybe not) how often this last step doesn't happen.
I'm going to make the assumption this most likely happened or they bought the truck and haven't had it titled/ registered yet.
OP, you need to treat it like everyone contributed $5,000. But part of your brother's portion went to the vehicle. I know that seems like the same thing, but accounting gets out of hand quickly when you start doing things like he contributed $1700 plus the truck, and not $5000 - the cost of truck.
I hate accounting FWIW, lol.
As a small business owner without partners, I have my own issues with this type of stuff. With partners, you need to be extremely strict on having one account and everyone ONLY using that account. When you all buy shite personally and want to be reimbursed, that kind of thing. It gets messy with a quickness.
Posted on 2/12/20 at 3:05 pm to baldona
quote:
I'm going to make the assumption this most likely happened or they bought the truck and haven't had it titled/ registered yet.
OP, you need to treat it like everyone contributed $5,000. But part of your brother's portion went to the vehicle. I know that seems like the same thing, but accounting gets out of hand quickly when you start doing things like he contributed $1700 plus the truck, and not $5000 - the cost of truck.
Yeah, ideally, OP's brother would have contributed $5,000 cash, like the others, and the partnership then purchases the $3,300 truck.
Posted on 2/12/20 at 6:31 pm to LSUFanHouston
Right. Ideally, we would have waited until our bank account was opened, but my brother has a hookup at a dealership and they were literally sending the truck to auction the day he bought it.
Posted on 3/3/20 at 9:23 am to saints5021
Once we have paid for all our expenses, the plan is to repay our investment. How would I code that so that it is not considered income, but rather a repayment?
Posted on 3/3/20 at 11:00 pm to saints5021
I believe you would credit cash and debit the equity for the repayment.
Posted on 3/21/20 at 4:25 pm to saints5021
Is there anything I need to do to make sure the members don't have to pay taxes on the payback for investment?
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