What should i categorize a transfer from bank account to quickbooks envelope

Forum|Forum|5 years ago
October 27, 2020
1 reply
2 views

I run a small business and would like to put money aside for my schedule C taxes. I started transfering a percentage of my income in a Quickbooks Envelope. Quickbooks wants to categorize this as an expense, which i think is not right. What is the best way to categorize this, knowing that I will have to transfer back (I assume?) the money from this envelope into my business bank account, then pay myself with it, so i can pay my income taxes next year. thank you all!

QuickBooks Online

Rustler

Level 15

I have no idea what a quickbooks envelope is, but anytime you take value out of the company as a sole proprietor (schedule C) that is an owners draw. When you invest that is owners investment.

I suggest for sole proprietors and partnerships the owner/partner equity accounts look like this:

[name] Equity (do not post to this account it is a summing account)

>> Equity ( first of the year roll up drawing and investment into this account as well as retained earnings)

>> Equity Drawing (record the value you take from the business here)

>> Equity Investment (record the value you put into the business here)

fg2020Author

Hi,

Apparently a QB Envelope is not taking value out of the company.

It's just moving money from your bank account into another account in order to save for future expenses. When needed, you move the cash from the envelope back to the bank account so you can pay whatever you need (taxes, payroll , etc...)

So I am not taking anything out. It just does not show in the main account but in a separate account (but cash available in report still shows bank + envelope).

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