BokepingIs money from the owner business income?
Distinguish owner contributions, loans, withdrawals, and reimbursements from sales and expenses.
Money coming into a business bank account is not always revenue. Money going out is not always an expense. The reason for the movement matters.
Identify the purpose
Section titled “Identify the purpose”| Situation | Treatment to discuss with your accountant |
|---|---|
| You put $2,000 of personal money into the business. | An owner contribution or an owner loan, depending on the arrangement. |
| The business borrows $10,000 from a lender. | A loan liability, not customer sales. |
| The business repays loan principal. | A reduction in the liability; interest is considered separately. |
| You withdraw money for personal use. | An owner distribution, draw, or another entity-appropriate treatment. |
| You pay a business expense personally. | The business cost plus the amount owed to you or contributed, as appropriate. |
Entity type matters. A sole proprietor’s draw, a corporate distribution, wages, and a shareholder loan are not interchangeable.
Before categorizing the bank row
Section titled “Before categorizing the bank row”Keep the source evidence and confirm what the money represents. In Bokeping, review the relevant chart of accounts rather than choosing Sales or an expense solely because cash moved.
If the event is already recorded, match the bank row to that record. Do not add it again as income or an expense.
Example: a personally paid business cost
Section titled “Example: a personally paid business cost”You pay a $60 business subscription from your personal account, then the business reimburses you. There is one underlying business cost. Recording the original cost and then treating the reimbursement as a second subscription expense would count it twice.
Agree the owner or reimbursement account treatment before posting. A personal account that is not part of the company’s books should not be treated as if it were the company’s checking account.
Check the effect
Section titled “Check the effect”Review Balance Sheet for owner equity or loan balances and Profit and Loss for actual business income and expenses. This distinction helps explain why profit and cash differ.
For a worked procedure, see record a personally paid business cost and reimbursement. For lender repayments, see split principal and interest.