Question

Recording home office expenses into quickbooks online and have books balance.

Forum|Forum|7 years ago
November 8, 2018
3 replies
53 views

I have a home office, in which i use 39% of my home for business use. I have a rule set up where 39% of my utility expense is classified as a business expense, and the other 61% as owner's contribution. My problem is that my "bank balance" is showing higher than the "in quickbooks balance". I pay for the expenses from my business checking account.

How do i correct this? If not, is there a better way to have the expenses entered where my figures match?

Any other suggestions on how to enter the home office expense?

QuickBooks Online

john-pero

Level 12

You have the payment of personal expense by business account reversed, it is draw not contribution. That may be part of the issue but written check should equal deduction from banking no matter where posted

M

MrBYOBAuthor

Thank you for the input. I'm not sure what you're explaining. How should I correct this?

M

Malcolm Ziman

Level 4

"My problem is that my "bank balance" is showing higher than the "in quickbooks balance""

The way you record the utility expense will not cause this. There are probably other unposted transactions, looks like deposits. Note that the bank feed does not show pending transactions, but the "bank balance" is adjusted for them

M

MrBYOBAuthor

The transaction is automatically recorded from my bank account. And there are no pending transactions.

J

JT_WA_State

@MrBYOB

I find the easiest way to enter home office expense is via journal entry.

Our firm posts all expenditures for home office items (utilities, rent or mortgage, pest control, gardening, r/m, etc.) to draws. NOT "distributions" as suggested earlier, as there is no home office deduction for an S-Corporate officer, ONLY for Schedule C.

You can enter a monthly journal entry for the "company portion" (what will be deducted on the Schedule C via Form 8829). We however prefer to do an annual entry with a December 31 date. Memo of: To reflect home office deduction, per 20XX Form 1040, Schedule C.

We use ONE GL Expense account, named "Home Office Expense." Debit this and Credit the Owner Draws account (as this "contribution" to the Schedule C company offsets the YTD draws).

A

Anonymous

@JT_WA_State would this method have any impact on the owner's personal taxes?

J

JT_WA_State

@anonymous

Sorry, just saw this message.

No effect on owner's taxes.

If the owner is using the business bank account for house expenses (rent, mortgage, utilities, property taxes, etc.), those transactions are posted to the Balance Sheet account, Owner Draws. They DO NOT go to the Profit and Loss, because such expenditures are NOT 100% business.

AFTER the tax return is prepared, wherein the Form 8829 will produce the business use portion of the above expenses, and carry such deduction to the Schedule C.

That is the amount that is a Journal Entry is created for. Using a 12/31/20XX date and a memo of "To reflect 20XX Home Ofc. Deduction, Per 20XX Form 1040."

This journal entry Debits an EXPENSE account called "Home Office Expense" and Credits the Owner Draws account. Offsetting the YTD draws, by the portion that was allocated to the business.

Sign up

Login with SSO

Let's get you signed in

Login with SSO