Receiving a non-taxable settlement check

Electrician · ‎August 29, 2022

My small company owns a Mercedes Sprinter van, I am part of a class action lawsuit in which I’ll be getting a $3500 settlement. My accountant told me that this settlement is not taxable.

I do my own bookkeeping and I use QuickBooks for Mac which he is not familiar with so I always come to this forum to ask questions.

The settlement money will be coming in the form of a check to my business name which means I have to deposit it into the business checking account.

Up until now I have always entered money coming into my business as “Job Income“ using the Sales Receipt dialog box.

How should I enter that check into QuickBooks so it’s not considered Job Income? I need a way to represent that money coming into my business checking account that won’t show it as taxable.

Then I would also like to take that money out of my business and put it into my personal account.

Rustler · ‎August 30, 2022

Deposit the check and use owner equity investment as the source account for the deposit.

then pay it back out and use owner equity drawing as the expense (reason) for the check when you want to

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Rustler · ‎August 30, 2022

Deposit the check and use owner equity investment as the source account for the deposit.

then pay it back out and use owner equity drawing as the expense (reason) for the check when you want to

Electrician · ‎August 30, 2022

Hey Rustler! Thank you for the response, you’ve been giving me great advice for almost a decade.

Your solution is very simple and straightforward. At first I was thinking to do that but I had a little concern labeling it as owners investment since it wasn’t coming from me. Thank you for the confirmation that it is the correct way to do it.

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Receiving a non-taxable settlement check