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jshoney
Level 1

personal checking is combined with business checking- how to enter transactions correctly?

I have the task of starting QB for a friend who, until very recently, had a combined personal and two separate businesses checking account.  The businesses are booming now so it is harder for the owner to keep track of everything.   I am new to QB so add that to my frustration.   I have to enter every transaction manually because the bank only exports to CSV formant and from what I have researched, that is a hassle to format to the correct type. (correct me if I am wrong, please!)   

The owner 's needs right now are very basic vs what QB offers.  The purpose is to make gathering data for the accountant easier and to be able to pull P/L reports and such.  (not needed for sending invoices, POs, writing checks, payroll, etc)     

 

QB Desktop Pro 2020  

self employed    

 

 

My questions are:

 

1. Is it acceptable to enter transactions as they show in the online bank account transaction list  OR do they have to be entered from the literal bank statement? (the online transactions are much easier to read)

 

2.  Am I supposed to create a company file for Personal so that I can enter the Personal transactions there (dinner, groceries, etc)  OR do I just skip those entirely as far as entering it in QB?

 

3. Actual Bank acct Transfers from Checking to Savings, Work Checking to Personal Checking (now that it exists), etc.   There are several transfer transactions involving now 4 accounts (Wk ck, Wk sv, Per ck, Per sv) How do I enter these?  

 

4. Is it correct to just enter Business1 transactions into that company file and Business2 transactions into that company file even though they are on the same bank account? (business2 is much "smaller" with very few entries) 

 

5.  Credit Cards- the cards are all used for business.  No idea what to do on this.  The payments are paid from checking, of course.  The balances are kept low to avoid interest or paid off.  

 

 

I am sure there are other questions that I have forgotten.  I tried to research for the answers, but couldn't find one to fit.  Thanks in advance for the help and advice!  

 

Solved
Best answer September 23, 2020

Best Answers
BigRedConsulting
Community Champion

personal checking is combined with business checking- how to enter transactions correctly?

RE: 1. Is it acceptable to enter transactions as they show in the online bank account transaction list OR do they have to be entered from the literal bank statement? (the online transactions are much easier to read)

 

Your goal is to put every transaction that has or will clear the bank into the bank account's register. It doesn't matter where you get the information to enter.

 

RE: 2. Am I supposed to create a company file for Personal so that I can enter the Personal transactions there (dinner, groceries, etc) OR do I just skip those entirely as far as entering it in QB?

 

Well, if you want to reconcile the account, then enter all the transactions that will clear the account.  But, for the personal expenses, use an Owner's Equity account, as the owner is basically drawing from the business each time they do that.   And, try to get them to stop doing this!

 

RE: 3. Actual Bank acct Transfers from Checking to Savings, Work Checking to Personal Checking (now that it exists), etc. There are several transfer transactions involving now 4 accounts (Wk ck, Wk sv, Per ck, Per sv) How do I enter these?

 

For the bank accounts you are tracking in QuickBooks, enter Transfer transactions between them.  If you transfer into our out of a personal account not tracked in QB, again that is an Owner's Equity transactions (increasing or decreasing equity, for deposits and draws respectively.)

 

RE: 4. Is it correct to just enter Business1 transactions into that company file and Business2 transactions into that company file even though they are on the same bank account? (business2 is much "smaller" with very few entries)

 

If these are two tax entities, then putting them together can be a hassle at tax time, though some people try this and use Class tracking to split the P&L.

 

RE: 5. Credit Cards- the cards are all used for business. No idea what to do on this. The payments are paid from checking, of course. The balances are kept low to avoid interest or paid off.

 

It is again better to enter all the data for a credit card account in it's account register so you can reconcile it and so the payments make sense.  Also better to not mix personal and business charges on the same CC account. But if that happens, then use an Owner's Equity account for the personal charges, just like the bank account transactions.

View solution in original post

2 Comments
BigRedConsulting
Community Champion

personal checking is combined with business checking- how to enter transactions correctly?

RE: 1. Is it acceptable to enter transactions as they show in the online bank account transaction list OR do they have to be entered from the literal bank statement? (the online transactions are much easier to read)

 

Your goal is to put every transaction that has or will clear the bank into the bank account's register. It doesn't matter where you get the information to enter.

 

RE: 2. Am I supposed to create a company file for Personal so that I can enter the Personal transactions there (dinner, groceries, etc) OR do I just skip those entirely as far as entering it in QB?

 

Well, if you want to reconcile the account, then enter all the transactions that will clear the account.  But, for the personal expenses, use an Owner's Equity account, as the owner is basically drawing from the business each time they do that.   And, try to get them to stop doing this!

 

RE: 3. Actual Bank acct Transfers from Checking to Savings, Work Checking to Personal Checking (now that it exists), etc. There are several transfer transactions involving now 4 accounts (Wk ck, Wk sv, Per ck, Per sv) How do I enter these?

 

For the bank accounts you are tracking in QuickBooks, enter Transfer transactions between them.  If you transfer into our out of a personal account not tracked in QB, again that is an Owner's Equity transactions (increasing or decreasing equity, for deposits and draws respectively.)

 

RE: 4. Is it correct to just enter Business1 transactions into that company file and Business2 transactions into that company file even though they are on the same bank account? (business2 is much "smaller" with very few entries)

 

If these are two tax entities, then putting them together can be a hassle at tax time, though some people try this and use Class tracking to split the P&L.

 

RE: 5. Credit Cards- the cards are all used for business. No idea what to do on this. The payments are paid from checking, of course. The balances are kept low to avoid interest or paid off.

 

It is again better to enter all the data for a credit card account in it's account register so you can reconcile it and so the payments make sense.  Also better to not mix personal and business charges on the same CC account. But if that happens, then use an Owner's Equity account for the personal charges, just like the bank account transactions.

View solution in original post

jshoney
Level 1

personal checking is combined with business checking- how to enter transactions correctly?

Thank you so much! 

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