Sometimes yourself or an employee might spend personal money while on official business and this might be reclaimable as a business expense. In this case we suggest that you create a new bank account in Tally named 'Expenses'. This account should always be a negative figure (representing debt the company owes the individual) or zero (representing nothing due).
To start, set up a new expenses account by going to Bank > Add a New Account. The three most important fields you should enter on the next page are:
- Account Name – This should easily identify the bank account, i.e. 'Johns Expense Account'.
- Start Date – This should be a date before the first transaction. To make things easy we advise that you enter 01/01/1970 here.
- Starting Balance – This should be 0.00.
When you're done, click Add Account. You're expense account is now ready to use.
Whenever anything is paid for out of personal money, record it in the same way by creating a purchase receipt as normal. The only thing different you should do is use the payment details section at the bottom of the receipt to record the payment going to the Expense Account. This will then build up a negative balance on the Expenses account. The amount the Expenses account is overdrawn by is the amount the company owes for these expenses. This balance is visible in the Bank page.
When you reimburse yourself, simply Transfer money for the main account to the Expenses account to set the balance back to zero by going to the Bank > Transfer Money Between Accounts button. Use the options here:
- Date – Enter in the date that you withdrew/transferred the money from the business account and gave it back.
- Amount – Enter in the amount withdrawn or transferred.
- From – This will be the business bank account where you gave yourself the money back from.
- To – This will be your expense account.
- Comment – to make this easy to reconcile you can enter in something like ‘Expense re-payments′ or similar.