Adjusting Health Insurance (company paid)

jmb001 · ‎February 17, 2019

An owner of an LLC wants to amoritize their insurance payments across the year. If I use an insurance expense and expense it to the vendor each month, is this the best way? Will it track in B-sheet this way?

qbteachmt · ‎February 17, 2019

"wants to amoritize their insurance payments across the year."

Let's examine some considerations: If this is a Cash Basis entity, then the date of the payment is the date of Expense. There is no Prepayment and Amortization process involved. If I accidentally pay 14 months' rent, I spent that much on Rent as Expense. That is Cash Basis tracking and reporting.

"If I use an insurance expense and expense it to the vendor each month, is this the best way? Will it track in B-sheet this way?"

Next, Health Insurance is a Personal Expense, part of the 1040. Not a Business Expense, unless that is for Employees. It is equity Out.

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qbteachmt · ‎February 17, 2019

"wants to amoritize their insurance payments across the year."

Let's examine some considerations: If this is a Cash Basis entity, then the date of the payment is the date of Expense. There is no Prepayment and Amortization process involved. If I accidentally pay 14 months' rent, I spent that much on Rent as Expense. That is Cash Basis tracking and reporting.

"If I use an insurance expense and expense it to the vendor each month, is this the best way? Will it track in B-sheet this way?"

Next, Health Insurance is a Personal Expense, part of the 1040. Not a Business Expense, unless that is for Employees. It is equity Out.

jmb001 · ‎February 17, 2019

Hi qbteachmt,

Thank you for your quick help.

I need to find out a) if this is a cash basis entity. 2) If the insurance is a personal expense for the owner or is for an employee.

Thank you for breaking it down and explaining each idea.

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Adjusting Health Insurance (company paid)