Recording home office expenses into quickbooks online and have books balance.

You have the payment of personal expense by business account reversed, it is draw not contribution. That may be part of the issue but written check should equal deduction from banking no matter where posted

Thank you for the input. I'm not sure what you're explaining. How should I correct this?

"My problem is that my "bank balance" is showing higher than the "in quickbooks balance""

The way you record the utility expense will not cause this. There are probably other unposted transactions, looks like deposits.  Note that the bank feed does not show pending transactions, but the "bank balance" is adjusted for them

The transaction is automatically recorded from my bank account. And there are no pending transactions. 

@MrBYOB

I find the easiest way to enter home office expense is via journal entry.

Our firm posts all expenditures for home office items (utilities, rent or mortgage, pest control, gardening, r/m, etc.) to draws. NOT "distributions" as suggested earlier, as there is no home office deduction for an S-Corporate officer, ONLY for Schedule C.

You can enter a monthly journal entry for the "company portion" (what will be deducted on the Schedule C via Form 8829). We however prefer to do an annual entry with a December 31 date. Memo of: To reflect home office deduction, per 20XX Form 1040, Schedule C.

We use ONE GL Expense account, named "Home Office Expense." Debit this and Credit the Owner Draws account (as this "contribution" to the Schedule C company offsets the YTD draws).

@anonymous

Sorry, just saw this message.

No effect on owner's taxes.

If the owner is using the business bank account for house expenses (rent, mortgage, utilities, property taxes, etc.), those transactions are posted to the Balance Sheet account, Owner Draws. They DO NOT go to the Profit and Loss, because such expenditures are NOT 100% business.

AFTER the tax return is prepared, wherein the Form 8829 will produce the business use portion of the above expenses, and carry such deduction to the Schedule C.

That is the amount that is a Journal Entry is created for. Using a 12/31/20XX date and a memo of "To reflect 20XX Home Ofc. Deduction, Per 20XX Form 1040."

This journal entry Debits an EXPENSE account called "Home Office Expense" and Credits the Owner Draws account. Offsetting the YTD draws, by the portion that was allocated to the business.

@JT_WA_State 

So what if I'm paying my rent through a personal account but then wanting to write off my office? Would this be an owner's contribution instead? I can still do one journal entry as of 12/31/19 debiting home office expenses (rent, utilities, etc) and crediting owner's contribution, right?

@RL1389 

No, you would not enter your rent paid from a personal account as an owner contribution, to reflect home office expense.

The above conversation and instructions are only for those who are paying their rent or mortgage and other household expenses via the business account.

I am assuming that you are reporting your business income via Schedule C, as part of your personal Form 1040.

In which case, since you are already paying household expenses via a personal account (the CORRECT way to do it...by the way), you would NOT make ANY adjustments during the calendar year.

AFTER you've filed your return for the year, look at the "Home Office Deduction" at the bottom of Schedule C. This amount has already been pro-rated for your BUSINESS PORTION of the expenses for use of your home.

Enter this amount as a journal entry on 12/31/20XX. Debit an expense account titled "Home Ofc Deduction." Credit "Owner's Contributions" (or Owner's Draws... which will reduce the YTD draws).

Does this make sense?

Jumping in here as I DON"T understand this.  ((I'm I.T. not bookkeeping))

We are a home daycare - use about 80% of the home.  We are an LLC and have separate bank accounts and pay the utilities through personal accounts.  How can I have the LLC "cover" the 80% of utilities? (In QB anyways). Now we just take weekly draws.  I think our CPA did our taxes incorrectly too - they did the "simplified" method (300sq ft vs 1200sq ft) - and didn't deduct the % of utilities.

I *think* it might be how I'm entering in QB.

Any advice is appreciated - even if it's hire a new CPA and sit with them to go over everything.

Welcome to the Community, at3chnoholic.
 

To properly identify how you can show your LLC covering 80% of its utilities, I'd recommend working with an accounting professional. If you're in need of one, there's an awesome tool on our website called Find an Accountant. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.
 

Here's how it works:

1. Go to our Find an Accountant page.
2. In the Find an expert in section, choose what you're looking for, then use your search field to enter a City or ZIP code.
   
3. Select Search.
   
4. Browse through the results and find one that works best for your business. You can click on each ProAdvisor's profile to learn more information about them.
   

Once you've found an accountant, they can be contacted through their Send a message form:

1. Use the available text box to introduce yourself. Be sure to include details about which services you're looking for.
   
2. Enter your appropriate info in the Your name, Your email, and Your phone number (optional) fields.
   
3. Hit Send message.
   

You'll additionally be able to find many detailed resources about using QuickBooks in our help article archives.
 

Please feel welcome to send a reply if there's any questions. Have a lovely day!

First ... I can navigate a website. Including that "tutorial" was making an assumption I find offensive and insulting.

Now - to your "recommendation" (one I figured I needed to do already) - I need an accountant that is far more specialized than what your site can search, CPA's that know how to do home based daycares are the needle in a haystack find.

Thank you for your time and responce

You will need to ask your CPA if which way they calculated your deduction for Home Office Expense.

Option 1 : "standard" deduction which is $5 per sq ft. (this includes space and utilities) 

Option 2:  calculate the sq ft and utilities separate across the total depreciation of your home (80%).

It can be done 2 ways, the standard deduction is the easiest way to account for the expense and offers a lower deduction but you do not have to pay it back when you sell your home.

If you take Option 2 it is a higher deduction amount but you will have to pay back that deduction amount of depreciation when you sell your home because it is categorized as Capital Gains. 

Your CPA should be able to determine if it is a better tax strategy to take the standard deduction now or the depreciation on the value of your home for the greater tax savings. I would just ask what they think.