Handling Employee Personal & Business Transactions in QuickBooks Online

This guide covers situations where employees mix personal and business spending, whether the employee owes the company or the company owes the employee. Examples include:

• Employee used company card for personal purchases
• Employee paid business expenses with personal funds
• Employee reimbursed the company
• Company reimbursed the employee

The key is to use a clearing account that keeps all personal amounts off the Profit & Loss until properly categorized.

Step 1 Create an Account to Track Employee Personal Use

Do this once per employee or use a single account for all employees:

1. Go to Settings → Chart of Accounts → New
2. Create:
   • Account Type: Other Current Assets
   • Detail Type: Employee Advances / Employee Receivables
   • Name: Employee Advances – [Employee Name] (or “Employee Advances/Loans” if one account is enough)

Scenario 1 Employee Used Company Money for Personal Expenses

• Categorize the transaction as Employee Advances / Employee Receivable when it appears in the bank feed. This prevents it from showing as a business expense.
• When reimbursed, record a Bank Deposit to the same account to clear the balance.

Scenario 2 Employee Paid Business Expenses Personally

• Record the original purchase as + New → Expense:
  • Payee: Employee name
  • Payment Account: Employee Advances / Employee Payable
  • Category: Actual business expense category (e.g., Office Supplies, Fuel, Postage)
• When reimbursing the employee, create an Expense or Check using the same account to clear the payable.

Scenario 3 Employee Transaction Contains Both Business & Personal Amounts

• In the bank feed, click Split on the transaction.
• Allocate:
  • Business portion → Actual expense category
  • Personal portion → Employee Advances / Receivables

Scenario 4 Employee Uses Personal Card for Mixed Purchase

1. Enter full transaction as + New → Expense:
   • Payee: Employee
   • Payment Account: Employee Advances / Payable
   • Split lines: Business portion → relevant expense; Personal portion → Employee Advances / Payable
2. Reimburse only the business portion using Expense or Check and select Employee Advances for the reimbursable amount.

Summary Table

Best Practices

• Track each employee separately, especially for audits.
• Never code personal amounts as business expenses.
• Never delete mixed transactions — split them instead.
• Reconcile the employee advance account monthly.
• Document repayments (memo field is sufficient).