Posting of Private Deposit in a sole proprietorship

Sole trader deposit





Deposit money. How do you post a deposit in your sole proprietorship? How to record an expense in the company that you paid from your private account? How do you account Owner deposits? How do I post an Owner’s Investment in my accounting software? You may have purchased something with your private credit card or made a payment from your private bank account, but the cost actually belongs to the company. Then you need to do something called Owner’s Investment or Self Deposit.

When you put money into the company’s account, then the company owes you this amount, and the equity is increased. Your book value grows. As you may remember from some accounting course, one can consider the company equity as a liability to the owner, ie, You. Since you put in your private money on the company’s bank account, the company has received a debt to you with that amount. It is not the company’s own money from the business, but it is a loan to the company from you personally, which you hopefully can get back when the company makes enough profit.

How to record Owner deposit (Owner’s Investment)

You can post Owner’s Investment directly when purchasing a product or service. Suppose you bought ink to the printer in an online store including VAT. Now you want it to be recorded in the company, even though you paid online with your private credit card. In this example, I am using a VAT rate of 25% and the Swedish chart of accounts, which is based on the 4-digit BAS-system, and you post like this:

Description Account Debit Credit
Office supplies 6110 482
VAT receivable (input VAT) 2641 120
Owner deposit (Owner’s Investment) 2018 602

 

How to record a deposit to your company

It may also be that your company needs more money to make purchases and pay suppliers and subscriptions and the like. Then you can simply inject capital into the company through Owner’s Investment on the company’s bank account. This also creates a debt from the company to you as an individual, and you are increasing the firm’s equity. You post your own deposit as follows:

Description Account Debit Credit
Business bank account 1930 10000
Owner deposit (Owner’s Investment) 2018 10000




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