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Buy nowI have a Quickbooks Online Advance Account for my healthcare practice. I am a sole-member PLLC presently still doing taxes as sole proprietorship. I don't have employees, I have contractors. Since my taxes are presently one-in-the-same as sole proprietorship, I have created a class called "Personal Itemized Deductions for Schedule A" and subclass from there as "Personal healthcare expenses", "Personal Mortgage Interest and Taxes", etc. However, when scanning in the documents/receipts, it asks for a "category". Do I label these items as "Personal Expenses"? This shows under "Owner Draws", however, the items were paid for under my personal account and not out of the business account. I want to be able to use my QB fully to represent and store my documents for tax purposes as well but I don't want the data to interfere with my business "books". Suggestions? I track all my documentation in QB for my accountant to help me keep up with for the year so when tax time comes, everything is neatly organized and labeled in one location.
@Serenity Health "I want to be able to use my QB fully to represent and store my documents for tax purposes as well but I don't want the data to interfere with my business "books""
Technically speaking, what you're wanting is mutually exclusive; if nothing else, having your personal expenses present in your business QB will always impact your PLLC's balance sheet, especially if it necessitates having your personal bank account represented in your QB account.
I suppose you could use the class system as you have been, if you do it a particular way.
That is, when you are paying something out of your personal account, you could move money from your business over to your personal account in that amount.
Then you could make a few different lines in the Expense called Owner's Draw, broken down as necessary for 'Personal Mortgage Interest', Personal Healthcare', etc.
Otherwise, all I can suggest is keeping the personal expenses off your business book entirely and using something else, perhaps Excel, to track the presumably less common personal expenses.
"I want to be able to use my QB fully to represent and store my documents for tax purposes as well but I don't want the data to interfere with my business "books". Suggestions? I track all my documentation in QB for my accountant to help me keep up with for the year so when tax time comes, everything is neatly organized and labeled in one location."
Agreed with @FishingForAnswers. If you don't want your personal expenses to interfere with your business books then the only option is to leave them out. There's no way to accurately record personal expenses paid personally in your business books without creating bogus entries. If these transactions crossed over between business and personal (business expenses paid personally or personal expenses paid by the business for example) then it makes sense.
I would argue that this is not cleaner but actually creates more work for you and your CPA/tax accountant so, unless your CPA/tax accountant has told you otherwise, I don't see how this is easier for preparing your tax return. Your SP reports on Schedule C and your personal itemized deductions are reported on Schedule A. Unless you are fully aware of all Schedule A deductions and how they break out (mortgage interest and property taxes are reported separately on Schedule A for example and there are likely other Schedule A deductions you're unaware of) then I don't see how this would be beneficial. Something else to keep in mind is the importance of keeping your business books clean and accurate. I have personally bought and sold several businesses and clean, accurate books are of paramount importance if you ever want to sell your business, take on a partner/investor, etc.
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