MYOB help please

[Crash Lander]

I have my account that all my income from the business goes into, and I also have an account I've called "Chris's personal funds", which is the account that had all my startup money in. Anything I buy for my business using my personal credit card, or personal funds comes out of this account (in the MYOB list of accounts). this account keeps a track of all the money that my business owes me. I think I am explaining this right so far.
Now, as this is my first year of business, I simply entered the starting balances in this personal funds account, and haven't added actual cash money to the Business since, except to pay things on a card etc.
Here is my question.
I wish to purchase a large item for my business. Say for example, it costs $14,000. I wish to use $10,000 from my actual business account, and then I want to borrow the remaining $4,000 from a family member.
How do I account for the extra $4,000 in my chart of accounts? Do I break the purchase up into $10,000 from the business account and $4,000 from my personal funds account, and just link the 2 transactions with a memo note?
the borrowed money will be deposited into the normal business account by the family member to facilitate the writing of a cheque to make the purchase.
Does this make sense?
I'd ask my accountant, but she doesn't use MYOB, and isn't familiar with how it works.
Hoping someone can help me here.
Thanks in advance.

[Unique Imprints]

Hi

I met a fellow flying solo member today who uses MYOB and trains people in it as well. She might be able to help. You can find her profile here. Her name is Beth from inter Accounts.

Hope that helps

[jetbookkeeping]

I would set up a liability account for the family member loan. Then you can book the $4,000 as 'receive money' into your main bank account, choosing the new loan account as the corresponding entry (instead of an expense account).
The item you purchase would go in as a single invoice (most probably an asset, not an expense) and be paid in 2 stages, $10,000 from one and $4,000 from the other bank account.
Hope that helps.
Alexander

[Normanby]

I agree with Alexander: make a liability account for the family member.
Your accountant is unfamiliar with MYOB?! Curious.
Kind of like having a carpenter unfamiliar with pine!
Matt
www.nohassleaccounting.com.au

[Crash Lander]

Originally Posted by jetbookkeeping

I would set up a liability account for the family member loan. Then you can book the $4,000 as 'receive money' into your main bank account, choosing the new loan account as the corresponding entry (instead of an expense account).
The item you purchase would go in as a single invoice (most probably an asset, not an expense)

OK, that bit makes sense to me, thankyou, but this bit:

Originally Posted by jetbookkeeping

and be paid in 2 stages, $10,000 from one and $4,000 from the other bank account.
Alexander

Doesn't make sense to me.
If the original money was "Receiv Money"-ed into the main account, why does it still have to be paid for in 2 parts from 2 accounts? Why wouldn't it be paid for in one payment from the main account, and then when funds become available, I pay out from the main account to the loan account and give the money back to the family member?
Also, If the agreement with the family member is to repay the original amount with an extra couple of hundred on top, can I book that extra against the "Interest Expense" account?

[Crash Lander]

Originally Posted by Normanby

I agree with Alexander: make a liability account for the family member.
Your accountant is unfamiliar with MYOB?! Curious.
Kind of like having a carpenter unfamiliar with pine!
Matt
www.nohassleaccounting.com.au

I asked her about MYOB when I first spoke to her about starting my own business. She said she will be able to work with the reports it spits out, but she uses a different program there, and not MYOB.

[interAccounts]

Hi Crash Lander,

What Jetbookeeping mentioned is the best way to do it - create a liability loan account specifically for your family member. When you create it, you'll need to select 'Credit Card' so that it shows up as a bank account in your Spend / Receive money sections.

The second part which you seem to be a bit confused on (2 stages) is to be used only if you didn't deposit the cash from your family member in your bank account before buying the asset.

If the loan from your family member is deposited into your bank account first before you buy the asset, then you don't need to do a split transaction for the asset.

In relation to deductibility of interest on this loan - yes, you can claim it as a deduction ONLY if the interest paid is very similar to the market rate or the specific rates set by the ATO. Having a loan agreement written up between your company and your family member would be advisable too - it avoids potential disputes in the future. Keep in mind that if you claim any interest as a deduction, your family member must also declare that in their tax return as income when they received it.

Hope this clears up your confusion.