Loans from Personal accounts...
This isn't exactly a YNAB question, but it's a question of how to handle tracking and things for my small business.
Lately my income has tanked due to losing my biggest client last fall. I'm also shifting focus into a new area, and trying to get that going, so I haven't replaced all of that income.
As a result I'm needing to pay for things from my personal accounts to keep the business covered. Thank goodness I'm FINALLY in a position in my personal finances to do that (yay increase in part time job pay and paying off personal debt!)
SO. I keep some tracking spreadsheets that I give to my accountant for taxes, and I'm trying to wrap my head around how to keep up with those personal loans. I have never really had to do this before, and I'm trying to make sure that everything is clean and makes sense (and that I can pay myself back down the road when I get the income flowing again!).
I'm trying to track how much I am covering from the personal accounts, so I assume that should be marked as a negative number as a "loan from personal" in my business accounts.
My struggle is that some things I am partially funding (like I had enough to cover half the payment for something, so I moved the other half into my business checking account from my personal one) so it shows an inflow, but the outflow needs to be tracked as the payment itself.
This is getting really messy and it's stressing me out (on top of the stress of having almost no funds coming in...) so any recommendations or suggestions for how to keep it really clean and simple are VERY welcome! (and I might not have explained this as well as I would have liked, so if this is confusing, please let me know...)
Hey, farfromtheusual ! I'm sorry to hear that you find yourself in this situation. Let's figure out how YNAB can help.
I think the best way to handle this, if it's possible, is to transfer money to your business before making the purchase. Categorize the outgoing transfer from your personal budget to your "Invest in my business" category.
In the business budget, categorize the inflow to the category you use for your owner's investment. I combine this with my owner's draw category. The total of all transactions in this category is my current equity.
This will prevent your investments in your business from showing up as business income.
I would be careful about using the word "loan" when describing this arrangement to your account, because a personal loan to a business comes with very specific tax rules. I suspect what you're doing is adding equity to your business, and plan to draw down your equity later, which is not a loan.
Now, if you have existing business purchases that were made using a personal debit or credit card, things are going to get complicated. The best solution is to enter those in a cash account in your business budget, with a corresponding reverse transaction showing that you're increasing your equity by the same amount. I can walk you through how to do this if necessary!