Using asset account to track prepaid taxes. How will I be able to reconcile my bank account now?

rsvv633 · ‎February 12, 2019

Using journal entries to move money from checking account to an "other asset account" for prepaid taxes. I know how to create the journal entries. But I don't know how I will be able to keep my checking account reconciled. It's balance decreases when I move the money, but the bank statement won't reflect that movement. So I don't know how I can keep the checking account reconciled properly.

Maybe I don't understand how to move funds in/out of the other asset account.....

qbteachmt · ‎February 14, 2019

You didn't tell us the tax entity type; are you managing Business Records? Because everything you just listed here is Personal, not business: "I have to set aside funds to pay annual taxes, an annual medical policy, and a large medical annual deductible.

$221.17/mo reserved for taxes

$76.50/mo reserved for special annual medical policy

$190/mo reserved for annual deductible

How can I do this and have my bank account reconcile correctly, and my P&L lead correctly."

Nothing hits the P&L; the P&L is for business. You want to Set Aside Funds = take a Draw, from Equity, for a Sole Proprietorship, park it in your own Bank account. You manage Personal outside of the business. Taking money from the Sole Proprietorship for Personal is a Draw from Equity. Run your Balance Sheet, not the P&L, to see the activity.

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john-pero · ‎February 12, 2019

You do not move money out of checking unless it really went out of checking. And unless you have some money to a government agency for Taxes before they are then you do not have any prepaid taxes.

If you have prepaid taxes then they were paid not from checking or like any other check they do reduce the checking account balance.

john-pero · ‎February 12, 2019

And you would never use a journal entry to move funds. To move funds from bank account you have Expense or Write Check. To put money back you Create Deposit.

Are you just trying to reserve funds so you do not spend them without adding a second real bank acvount? Then your bank type reserve account and your checking account will be a sub accounts of a parent bank account. And still, no to jpurnal entries, no tracking of names and it overrides cash vs accrual

qbteachmt · ‎February 13, 2019

Prepaid Taxes means banking really happened. That means the bank statement should also reflect that the spending occurred, for the bank account used to make these payments.

What is your business Tax Entity Type, and which tax did you prepay, and how did you prepay?

rsvv633 · ‎February 13, 2019

Yes, I think "reserve" is a better word then.

I have to set aside funds to pay annual taxes, an annual medical policy, and a large medical annual deductible.

$221.17/mo reserved for taxes

$76.50/mo reserved for special annual medical policy

$190/mo reserved for annual deductible

How can I do this and have my bank account reconcile correctly, and my P&L lead correctly.

qbteachmt · ‎February 14, 2019

You didn't tell us the tax entity type; are you managing Business Records? Because everything you just listed here is Personal, not business: "I have to set aside funds to pay annual taxes, an annual medical policy, and a large medical annual deductible.

$221.17/mo reserved for taxes

$76.50/mo reserved for special annual medical policy

$190/mo reserved for annual deductible

How can I do this and have my bank account reconcile correctly, and my P&L lead correctly."

Nothing hits the P&L; the P&L is for business. You want to Set Aside Funds = take a Draw, from Equity, for a Sole Proprietorship, park it in your own Bank account. You manage Personal outside of the business. Taking money from the Sole Proprietorship for Personal is a Draw from Equity. Run your Balance Sheet, not the P&L, to see the activity.

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Using asset account to track prepaid taxes. How will I be able to reconcile my bank account now?