Quicken Home & Business 2007 - Help Getting Started

What type of small business? What tax entity-LLC, SP, S-corp or C-Corp are they? One could argue that mixing business and personal books is not a good thing. In the event of an audit the IRS might see the so-called business expenses as personal and disallow a lot of deductions. Make sure they are using separate checking accounts and credit cards to keep the books separate.

In Quicken, either setup separate books or at least set up separate categories for their personal expenses. Then you can create customized reports on just those categories that apply to their personal expenses.

It's just you. I would have stated the opposite, as Quicken was designed as a personal finance program. Tracking personal information such as mortgages, loans,

Which is a good thing.

Quicken uses 'categories' to keep track of different expenses. There are categories pre-existing for a number of common income and expense items, like 'Salary' 'Interest' etc.

Open the category list and check the box to Display tax information. This will show you what tax forms each item has been linked to. If you are tracking income and expenses from a business, you will most likely want to add/modify categories to correspond to the business expenses.

I've used Quicken for decades. It was useful to me in tracking expenses from a 'sole proprietorship' type business. I also successfully tracked 1099 income from my consulting days. This was years before the 'Home and business' version came out with invoicing capabilities.

To keep track of separate income/expenses for home and business, set up separate categories for each - making sure that the tax information is correct.

As for reporting, to my knowledge there isn't a simple way to separate out "business" categories from "personal". But, I 'downgraded' from Home & Business" to "Premier" when I last purchased, so I am unsure of the added reports. I suspect if you go to the reports menu you might find reporting specifically for the business.

AJ, I have used QH&B for several years to manage my full-time consulting business (an LLC filing as a Schedule C self-employed) as well as home finances. (Previously used Quickbooks for business and Quicken for home). QH&B has been just perfect for my needs; I believe it is basically geared to the private individual or couple with multiple income streams (e.g. actively managed investment accounts, real estate holdings, E-bay business, etc.) and relatively simple business accounts. (If I carried an inventory, hired more than a couple employees, or had real estate improvements associated with the business; I would definitely be using Quickbooks for the business side.)

The basic rules still apply - keep separate accounts for business and personal expenses. In QH&B 2005, I have a "Business Center" with all the business accounts (Invoices, banking, business loans, assets, etc.). The "Cash Flow Center" (banking, credit cards), "Investing Center", and "Property and Debt Center" are for personal accounts only. In addition, I have a whole separate set of categories for the business. As I recall, QH&B 2005 provided a wizard-like template for setting up the initial accounts and categories. It seems you may have missed this if your business accounts are set up in the Cash Flow Center, but it should be straitforward to move them over. Good luck, tmb

You are describing exactly my predicament.

I have a banking account in the cash flow center, where all money, both business and personal, is routed through. (not my decision :) )

I have a business center, where I defined accounts payable and accounts receivable. Here is where I inputted all business related expenses (i.e. salary, supplies, invoices, etc).

I have a Investing Center, where the 401ks and IRA's will go. (haven't done this yet).

I have 2 problems:

1) Where do I put household expenses? (i.e. mortgage payment, car payment, cell phone, etc)??? Property & Debt Center? 2) The net worth number doesn't decrease as I add account payable entries to the business center.

Thanks, AJ

It's just you. Quicken Home & Business versions contain all of the same capabilities, utilized in the same way, that the non Home & Business versions of Quicken contain. The "Business" part of H&B is just an add on to the "Home" part.

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I suspect that the simplest and most straight forward way is to create one Quicken file for the business activities and another Quicken file for the personal activities.

This is a mistake. You should keep separate bank account for business and personal activities.

Some may find two accounts helpful, but it's far from a mistake to use just one. I've used one checking account since 1989 for both personal and (self-employed) business purposes. Same with credit cards. As an example, when I pay my home telephone bill, the charge is to TelExp; when I pay my business telephone bill, the charge is to TelExp/Bus. I can run business reports by simply filtering to include only the Bus class. Simple and effective for my situation.

one. I've used one checking account since 1989 for both personal and (self-employed) business purposes. Same with credit cards. As an example, when I pay my home telephone bill, the charge is to TelExp; when I pay my business telephone bill, the charge is to TelExp/Bus. I can run business reports by simply filtering to include only the Bus class. Simple and effective for my situation.

Two accounts will be really helpful the first time you are audited by the IRS.

Well, many experts (I would say "most experts", but I can't prove that, although I've never heard an expert saying co-mingling your business and personal funds is ok!) certainly feel it's a mistake. For example, see:

... operative sentence in the 3rd paragraph: "You should have a separate business checking account, even if you are a sole proprietor. "

Another citation (on the point of separate credit cards)

sez "Set up a separate business checking account and designate a credit card to be used only for business purposes. Never co-mingle business and personal expenses." True that not all suggestions are always valid for everyone, but think hard about co-mingling!

Actually, I did use separate business and checking accounts all the way up until, let's see, about 1989. That's when I discovered Quicken. Since then, I've been able to separate personal and business transactions and reporting with a level of sophistication unmatched by two checking accounts. But that's me. If two checking accounts work for you, have at it.

Jim - Be clear I'm NOT talking about using Quicken and how it may help separate your reporting - indeed, with CLASSES, you certainly CAN make the reports different and clear - I'm talking about the physical underlying bank accounts themselves. As someone else pointed out, in an IRS audit, I believe the very fact you have co-mingled accounts will immediately think that indeed you ARE playing loose with the funds no matter how your 'report' them. All may be very well and in the up and up, but you'd already be starting from a defensive position. Why take the chance?

But whatever! If indeed it works for you, no problem.

Actually, what you don't want is commingled income and expenses. That's the bottom line. If two bank accounts help, that's great.

Sorry. That's just not true.

OK - we disagree.

Just Google USENET groups with "irs comingling business personal audit" and you'll see a number horror stories...one

reads: "The IRS considers it "comingling" and definetly frowns on that practice and can make life hell on earth. I would get another accountant, personally. Having been an IRS auditor years ago, I can guarantee you a full field audit should you be lucky enough to be selected at random.

Joann Painted Babies Originals VA "

another

reads :

"Be reasonable, if you were auditing somebody and you observed that they were comingling pleasure and business with such games wouldn't you want to keep on digging deeper? "

Kris in

writes: "Yes, I know....but I know several people who've had IRS audits, and the co-mingling of funds made it difficult to prove income sources, as well as prove to the IRS that some expenses were purely business-related. One relative had an audit that went on for over a year. Ugly as hell. Kris " So, although technically true from a legal point of view as long as you keep good records you're legally ok, I still argue why risk it? If I was being audited for suspected reasons, I wouldn't want to be in that position!

So, again, YMMV.