Partnership Accounting

[saad25]

Hi All,

I am starting the accounting of a partnership that came into operation a month back. The following is the situation:

1. No dedicated cash was put in the company bank account and both partners were using personal cash for expenses on the pretext that it will be recovered by the business at some point

2. No accounting has been set up

3. Everything is maintained on excel for now

Should I start by creating Capital ( owners Equity ) or just keep it as a liability of the business to be repaid once the business is able? Treat it like a business loan?

Kind regards,

 

[kirby]

If they expected to recover their expenses " on the pretext it will be recovered" then it SOUNDS like they expect to be reimbursed. In any case, the most straightforward path is for you to ASK THEM what they expect to happen to those amounts.