# SOP — Removing a Personal Bank/Card Account from a Client's QBO

**Owner:** Ledger
**When to use:** A client's QBO has a personal bank or credit card account erroneously on the books (or actively connected to a feed). Catches: account name has owner's personal initials, balance behaves strangely, used as a "sinking fund" for personal sub-categories of Distributions, or owner confirms it's personal.

**Prerequisites:** Before running this SOP, post any cleanup JEs needed to (a) reclassify business expenses that were paid from the personal account as Owner Contributions, and (b) zero out the account's balance via a prior-period adjustment to Retained Earnings (or current-period equity, depending on materiality).

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## Order matters

Do NOT inactivate the COA account first. If the feed is still connected when the account is inactive, QBO will either keep importing transactions into a broken state or flag the connection — either way it's noisy and harder to clean up.

## Steps

### 1. Disconnect the bank feed for the personal account
- QBO → **Banking** (or **Transactions** → Banking)
- Find the tile for the personal account
- Pencil/edit icon → **Edit account info**
- Click **Disconnect this account** → confirm
- This stops new feed imports immediately

### 2. Clear any "For Review" transactions for that account
- Same Banking screen, click into the account tile → **For Review** tab
- Select all pending transactions
- Click **Exclude** (do NOT Accept and do NOT categorize — Exclude removes them from pending without posting to the ledger)
- Anything in **Excluded** or **In QBO** that's already been touched by cleanup JEs: leave alone

### 3. Delete or disable any Bank Rules targeting the account
- Banking → **Bank Rules**
- Filter/search for any rule that posts to or routes activity through the personal account
- Delete the matches (so they don't auto-categorize anything if someone reconnects later by accident)

### 4. Mark the COA account inactive
- Settings (gear icon) → **Chart of Accounts**
- Find the personal account → Action menu → **Make inactive**
- If QBO blocks inactivation because of recent transactions: check that all cleanup JEs have posted and the balance is $0

### 5. Repeat for any other personal accounts on the same client's books
- Especially watch for: tax savings accounts, IRA accounts, owner's personal credit cards (Barclay, etc.), spouse's accounts
- Same 4-step drill each time

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## Going-forward rules to lock in with the client

Once the personal accounts are off the books, agree on how owner-personal activity gets treated:

| Situation | Treatment |
|-----------|-----------|
| Daily/routine cash transfers from business operating accounts to owner's personal accounts | Record as **Distributions** (or sub-account of Distributions) — money truly left the business |
| Owner pays a business expense from a personal card or account | Submit receipt → bookkeeper records `DR <expense> / CR Contributions` (or `Owner Reimbursable` under an Accountable Plan if reimbursing) |
| Owner deposits personal cash into a business operating account | Record as `DR <bank> / CR Contributions` |
| Personal account activity (charges, deposits, interest) | **Never touches the books** — no feed, no JE, no nothing |

## Accountable Plan note

If the client owner uses a personal credit card for business expenses on an ongoing basis, recommend setting up a formal Accountable Plan (written policy) and reimbursing the owner per a monthly expense report. Otherwise the IRS treats direct payment of an owner's personal card from business funds as a constructive distribution (S-Corp) or compensation, and the underlying business expenses may not be deductible without receipts.

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## When this SOP applies to a client besides the first one

The first client this ran on was **Tons of Bubbles** (April 2026 cleanup). Account-level personal-on-books patterns to watch for at any other client:
- Bank account name includes owner's first name, last 4 of personal account, or "personal"
- Account has unusual recurring "sinking fund" inflows from operating
- Distributions sub-accounts are named after bank account last-4s
- Owner refers to it as "my savings" or "the IRA account"

Discovery question to ask the owner: *"Of the bank accounts on the QBO chart of accounts, which ones are 100% business and which are personal accounts you've been using for some business activity?"*