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How to Record a Business Expense Paid by Personal Card

A quick guide on how to correctly record a business expense paid from a personal account, whether you're a sole proprietor or incorporated in Canada.

Sometimes a legitimate business expense gets paid from a personal account — you're out for a client lunch, your business card isn't handy, or you forget which card you're using. This happens. The key is recording it correctly so the expense is captured in your books and you can reimburse yourself (or the company reimburses you).

What You'll Need

- Access to QuickBooks Online

- The receipt and amount

- The date of the expense


Normal Procedure

Sole proprietors

If you're a sole proprietor, there's no legal separation between you and your business. A personal card purchase for a legitimate business expense can simply be entered as a business expense in QBO — no separate reimbursement step needed.

  1. Go to + New > Expense.
  2. In the Payment account field, select the expense account that represents your personal funds (usually set up as "Owner's Equity" or a similar clearing account — ask your Mesa CPA bookkeeper to confirm the correct account for your setup).
  3. Enter the Date, Amount, and Expense category.
  4. Add a note in the description confirming this was a personal card purchase for a business expense.
  5. Click Save and Close.

Corporations

For corporations, you are legally separate from your business. When you pay a business expense personally, the company owes you money — this is recorded as a shareholder loan or employee expense reimbursement.


Step 1: Enter the expense in QBO
  1. Go to + New > Expense.
  2. In the Payment account field, select the Shareholder Loan account (or the account your Mesa CPA bookkeeper has set up for this purpose).
  3. Enter the expense details — date, amount, and category.
  4. Click Save and Close.

This records the business expense and increases the company's liability to you (the shareholder).


Step 2: Reimburse yourself

When the company pays you back (e.g., via e-transfer from the business account to your personal account):

  1. Record the payment as a transfer or payment from the Shareholder Loan account.
  2. The shareholder loan balance reduces by the reimbursement amount.

Alternatively, the expense can be netted against salary or dividends at year-end — your Mesa CPA advisor will recommend the cleanest approach.


Abnormal Procedures

You've been paying business expenses personally for months without recording them.

Compile all the receipts, and work through them with your Mesa CPA bookkeeper to enter them in the correct period. The sooner this is reconciled, the better — especially for corporations, where untracked personal payments to the business can create shareholder loan issues.


You mixed personal and business on the same receipt (e.g., a lunch where some guests were personal).

Only the business portion is deductible. Split the receipt and enter only the business share. Note in the description who the business guests were — the CRA can request this for meals and entertainment.


You're not sure if an expense is deductible.

Enter it and note the details, then ask your Mesa CPA advisor. It's easier to remove an expense than to try to claim one you didn't record.


FAQ

Can I just not record personal card expenses and pay them myself without putting them through the books?

Yes — if you're a sole proprietor and choose to absorb a business expense personally without claiming it, that's your choice. But you'd be leaving a deduction on the table. For corporations, it's more important to properly document and reimburse expenses through the company.


Is there a limit to how many personal card expenses I can run through the business?

No limit, but the CRA expects all claimed expenses to be legitimate business expenses. Keep receipts and be prepared to explain the business purpose of anything unusual.


What about expenses I put on a personal card that I want to get a credit card rewards benefit from?

That's fine — the payment method doesn't affect whether an expense is deductible. Just make sure it's recorded correctly in your books.


Do I charge GST/HST on the reimbursement?

No. Reimbursements aren't income — they're the business paying back money you spent on its behalf. No GST/HST applies to the reimbursement itself. However, the original expense may have had GST/HST that you can claim as an input tax credit — your bookkeeper will handle this.