Is there a way I can virtually categorize my income to allow me to put money aside for things like taxes, marketing, investments, owners draw, etc?

Hi ryan-sofimade-me,

I'm impressed that you're thinking ahead and setting aside money for future expenses. That's a smart financial move and shows your dedication to being financially responsible.

Let's start with categorizing your income. When you create invoices or sales transactions, QuickBooks is actually categorizing them in the background. For example, if you're invoicing a customer for a certain service and you mark it as taxable, a portion of it will post to the Income account you assigned to the item and to the tax liability account. This is automatically done in the background. It's like, you enter the transactions, and QuickBooks will do the background accounting.

About setting aside funds, good thing you mentioned "Envelopes" because that's actually an available feature in QuickBooks Checking. QuickBooks Checking, on the other hand, is a virtual bank account that allows you to enter transactions, such as checks, deposits, credit card charges, etc., and can be linked to QuickBooks to automatically post transactions into your books. One of its features is Envelopes where you can set aside funds for future transactions.

Learn more about:
 

• QuickBooks Checking
• Envelopes

Please note that you need to have a QuickBooks Payment (Merchant) account to apply for QuickBooks Checking.

Let me know if you have more questions about setting aside funds. Take care and have a good one!

Thank you JessT for your very informative and helpful response! As you might guess, I'm new to using quickbooks so still trying to figure everything out.

In your example, I understand now how quickbooks is categorizing tax for me but then is there a way to see a balance of what I'll need to pay when I file my taxes quarterly? Right now I can see how much money I have in my checking account and how much I owe on my credit card (which is paid in full every cycle) but the money left over (my profits) just seem to be a lump sum sitting there. I used a program previously that would allow me to put that money in virtual envelopes so I knew for example, how much I had in my marketing budget or investments budget. And then I could move that money around virtually if needed.

You mentioned the envelopes feature in Quickbooks checking which may be exactly what I'm looking for. I understand the concept of virtual envelopes but when you say it's a virtual checking account does that mean if I transfer money from my bank checking account into quickbooks checking that there's no "real" transfer? Meaning it will not show up as an actual transfer on my banks statement?  

Thank you in advance for your help here!

-Ryan

Thank you JessT for your very informative and helpful response! As you might guess, I'm new to using quickbooks so still trying to figure everything out.

In your example, I understand now how quickbooks is categorizing tax for me but then is there a way to see a balance of what I'll need to pay when I file my taxes quarterly? Right now I can see how much money I have in my checking account and how much I owe on my credit card (which is paid in full every cycle) but the money left over (my profits) just seem to be a lump sum sitting there. I used a program previously that would allow me to put that money in virtual envelopes so I knew for example, how much I had in my marketing budget or investments budget. And then I could move that money around virtually if needed.

You mentioned the envelopes feature in Quickbooks checking which may be exactly what I'm looking for. I understand the concept of virtual envelopes but when you say it's a virtual checking account does that mean if I transfer money from my bank checking account into quickbooks checking that there's no "real" transfer? Meaning it will not show up as an actual transfer on my banks statement?  

Thank you in advance for your help here!

-Ryan

Hi there, @ryan-sofimade-me. 

I'm here to provide clarifications with your follow up questions. 

Let me start with your question about how you can see the balance for your quarterly taxes. You can run the Sales Tax Liability report to get a detailed look at the taxes you owe and why you owe them. This helps you ensure everything is accurate before you file your return to your tax agency.

Here's how: 

1. Go to the Taxes tab on the left side. 
2. Click the Reports drop-down arrow located on the right pane. 
3. Choose Tax liability report.
4. Pick the appropriate Report period and Tax agency in the box. 
5. Hit Run report. 

For more details, see this link: Check how much sales tax you owe in QuickBooks Online.

With regards the QuickBooks Checking, only real money can be transfer from checking to envelope. It only serve as a sub-account in your QuickBooks Checking. 

For more tips and other resources you can use in the future, I recommend visiting our website for future reference: Self-help articles.

Please post again or comment in this thread if you have additional questions about your taxes or anything else QuickBooks. I'll be happy to answer them. Stay safe.