I'm having a problem distinguishing between business expenses and
personal expenses in Quicken 2005 Home and Business. I download data
from my banking/credit card company. I have several separate
accounts, some of which are business-related and some home-related. I
need to see only the business-related expenses in my P&L. How do I
classify expenses as business (tax deductible) vs. home/personal?
Open the report. Select customize. Go to the accounts tab and omit the
accounts that you don't want to see.
A better way: Use classes (check help) for the business expenses. Then run
your P&Ls only on the class(es) you want to see.
Thanks for the reply. I read over the section on classes and created
several. Actually, after thinking about it a bit, I probably don't
even need to do that.
If I only want to keep track of business expenses, and not household
expenses, then I can just use the categories that already exist (or
maybe create new ones), and assign each business expense to a
category. I could leave the household expenses uncategorized and not
included in any of my P&Ls.
If you see an error in my logic, please tell me.
Incidentally, I also live in New Orleans. Actually, I live in Kenner,
close to the lake, north of the airport. Small world...
The beauty of using classes is that you only need one set of categories for
all endeavors -- personal and business, and multiple businesses. Just
assign a class to each "endeavor" and that tells Quicken to handle those
expenses in powerful ways. You can report on one or multiple classes and
only the categories that have transactions with the selected classes will be
included in the report. Thus, there is no need to create categories solely
for business, unless a category you need does not exist.
All expenses should be categorized. If you don't categorize them, there is
no reason (that I can see) to even bother entering them.
Many of us who run businesses assign classes to the business expenses, and
no class to personal expenses. Initially, the concept of classes can be
confusing. However, once you have utilized classes for business expenses,
you will never look back.
Actually, I don't enter them. I get all my transaction data online,
so the expenses are automatically downloaded.
I'm not really concerned about categorizing my personal expenses. But
I do see your point about having various classes if you have more than
one business. (Or really care about following your personal expenses.)
Depends on the size of your business.
For some business, you would set up a separate Quicken file.
If the size of your business doesn't justify that, you would use
separate accounts. That is, there would be business checking
account(s), business credit card(s), etc.
If the size of your business doesn't justify that, then business and
personal items are commingled in the same Quicken file, the same
Regardless of the above, categories for business are different from
those for personal - they are very different things even if the
vocabulary is similar. If your business files a Schedule C return,
categories matching Schedule C lines might be appropriate,
"L04CostOfGoods" for example.
In making your choices, you are looking not only for a method that can
meet requirements, but also one where errors are less likely, can be
detected and corrected. I mention this having noticed a post where text
suggests leaving personal expenses uncategorized - thus an uncategorized
business expense becomes a personal expense, an undetectable error. Yes,
you can always enter a wrong (personal) category for a business expense,
but that is an error of commission, not omission.
I agree, to some extent. In my opinion, three factors that might warrant a
separate Q file, in descending order of importance:
1. The business is incorporated.
2. Need for separation of personal (or another business) entries from
workers who have access to the file. This includes large businesses.
3. No need or desire for personal expense entries on the file/computer
being used for business. Some of that might be IRS-driven.
If classes are implemented, there is no reason why many personal and
business categories cannot be the same, such as: Advertising, Office
expenses, L&P, vehicle expenses, utilities, repairs, supplies, insurance,
etc.* Your example for COGS is not likely to have personal use; however,
personal expenses certainly COULD be categorized to the COGS category and in
no way affect the OP's reports or data importation, as long as the business
class is not appended to the entry.
*However, if the Q data is to be imported into a tax prep program, then one
category cannot be shared if there is any chance that expenses to that
category will wind up on more than one tax schedule. For example, if OP
owns rental property, there should be two categories for Advertising, since
one Advertising category needs tax line assignment to Sched. C and another
Advertising category needs tax line assignment to Sched. E.
I do agree that, if only for reports appearance's sake, OP should modify his
category names to at least approximate the tax vocabulary.
I agree, a method(s) needs to be employed to reduce the chance of errors.
In my case I make a simple class report quarterly for each class, and
reconcile each receipt to an entry in the class report. This is fairly
easy, since class reports can be sorted by amount, date or Payee, making it
very easy to find the entry in Q.
The OP said he uses separate accounts for business. This further reduces
the chance of errors.
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