Move a balance between out-of pocket expenses and the capital account

This article explains how to transfer a balance from your out-of-pocket expenses to your capital account in FreeAgent if you're a sole trader, partner or unincorporated landlord.

If your expense account has an outstanding balance owed that you would like to clear to your capital account, you can move the balance by entering manual bank transactions or creating journal entries.

Option 1: Enter manual bank transactions

Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.

Choose the relevant bank account from the list.

Select the ‘More’ button and choose ‘Add transaction’ from the drop-down menu.

For the first manual bank transaction, select 'Money Paid to User’ as the 'Type, the user who's expense account balance you want to clear from the 'Payment to' menu and 'Expense Payment' as the 'Reason'.

Please note that this option will only be available for business bank accounts. You won’t see this option if the bank account has been marked as personal or for a user who has been allocated the role of ‘Accountant’. 

Enter the expense account balance in the 'Value' field and select 'Create and Add Another' at the bottom of the screen.

For the second manual transaction, select 'Money Received from User’ as the 'Type, the user who's expense account balance you want to clear from the 'Received from' menu and 'Capital Introduced' as the 'Reason'.

Please note that this option will only be available for business bank accounts. You won’t see this option if the bank account has been marked as personal or for a user who has been allocated the role of ‘Accountant’.

Enter the expense account balance in the 'Value' field and select 'Create and Finish' at the bottom of the screen to complete the process.

Option 2: Create journal entries

Navigate to the ‘Accounting’ tab at top of the screen and select ‘Journal Entries’ from the drop-down menu.

Select ‘Add New Journal Entries’ in the top-right.

Next, enter the following journal entries depending on whether you want to increase or decrease the balance in your expense account. If you’re unsure which journals are required, please ask your accountant.

Increase the balance in your expense account

• Debit code ‘901 - Capital Account’ for the amount you want to increase the balance in your expense account by
• Credit code ‘905 - Expense Account’ for the amount you want to increase the balance in your expense account by

Decrease the balance in your expense account

• Debit code ‘905 - Expense Account’ for the amount you want to decrease the balance in your expense account by
• Credit code ‘901 - Capital Account’ for the amount you want to decrease the balance in your expense account by

Once you’ve entered the relevant journals, select ‘Create Journal Entries’ to complete the process.