What you'll learn:
- Use equity draws accounts to track personal tax items in a business QuickBooks Desktop Pro 2019 file
- Use classes to track personal tax items in a business QuickBooks Pro Desktop 2019 files
- Add add, work with, and explain how to use classes in QuickBooks Desktop Pro 2019
- Explain how the profit and loss statement is related to the equity section of the balance sheet
Use QuickBooks to track personal tax item as well as business expenses easily, so that we have more of our year-end tax preparation materials in one place that is well organized.
Tracking personal tax-related items in a business QuickBooks account is actually a highly controversial topic in the world of accounting and bookkeeping, the conventional wisdom being that we should separate any personal items from the business files as much as possible, whether they be tax related or not.
Many small businesses use QuickBooks primarily to help with year-end tax documentation needs, however, and a system that can achieve more of these needs in one place will be worth the time to learn.
Professional bookkeepers can use these methods to help differentiate themselves from the competition by providing more service that client will greatly appreciate for minimal extra effort once the system is set up.
We will provide two methods for tracking personal tax items in our business QuickBooks file and let you decide if either of these methods will work well for your needs.
One method will work with equity draws accounts and the other method will utilize QuickBooks classes to track personal tax-related items in the business QuickBooks file.
Both methods have their pros and cons and the choice between the two will come down to the individual needs and preferences of the business and bookkeeper.
QuickBooks does a great job of tracking business expenses which we can also think of a business-related deductions, deductions a sole proprietor would report on a schedule C.
There are many other personal deductions a business owner may want to track as they are paid, however. For example, a business owner may want a system for tracking charitable payments, medical payments, child care payments, college costs payments, retirement plan payments, and state tax payments.
QuickBooks can help to track these personal payments as well as business payments, and we will provide methods for doing so.
