My wife and I each have our own freelance businesses. We file a joint tax return and of course share a household bank account and credit card, along with a business account and business credit card for each of our businesses. We're new to Quickbooks, but have used Quicken up till now to code all of our transactions for either or both of our businesses, or for personal expenses.
I'm just getting started trying to figure out how to set all this up, now that I linked our bank accounts. But the first stumbling block I'm seeing is the apparent assumption that this account is just for one business (where you input the name, etc.). I'm assuming I can ignore all that and simply code expenses in each of the business accounts and in the joint personal accounts with tags/categories that tie in with the proper business. Right?
Even though y'all file jointly, each business is required to file its own schedule C as part of the joint return.
Each business needs its own CC, even if you use a personal CC and dedicate it to the business, as well as a business bank account.
and the IRS requires that each business has its own set of books (in QBO that means two subscriptions, or one purchase of QB pro), no commingling of funds or accounting IRS Pub 583, Page 5 - must keep separate books per company
and for sole proprietors IRS Pub 334, page 40 - "If you have more than one business, you must figure your net profit or loss for each business on a separate Schedule C." IRS Pub 334, page 45 - separate schedule C for each business
Assuming that the 2 businesses are sole proprietorships then you can use one QBO account or QBD company and use the Class feature to tag each transaction (or even lines within a transaction) as to which business it applies to. You can then run a P&L by Class, to produce a schedule C for each business. The Class feature is only available in QBO Plus.
Personal expenses could be either coded to Equity Draws or use "Other Expense" type accounts, if you want to categorize them. If you make sure that business expenses are regular "Expense" type accounts, then the "Operating Profit" on the P&L will be your taxable business income, as the Other Expenses are below that
I appreciate both answers. But I'm starting to think I bought way more accounting firepower than I need. We have very simple, very small sole proprietorships. I need a tool to keep track of expenses to then input everything manually in Turbotax. I used Quicken for this but hated the software, especially its autofill feature that continually filled in erroneous categories and tags that weren't flagged for review and couldn't be disabled (on the Mac version). I don't need or want or know how to use an actual accounting software to calculate P&Ls and such.
I appreciate the responses above, but they're leading me to the conclusion that I have bought the wrong product for our very small, very simple sole proprietorship freelance businesses. I don't see the need, nor do I want to learn, to keep a formal P&L for these businesses. I just need to track expenses and income that I then input into Turbotax (and I don't trust our categorizing enough to do that automatically; instead I just walk through the Turbotax questions and find the numbers I need). I had used Quicken for this and would have stuck with it but for its incredibly annoying autofill feature which, in the Mac version, cannot be disabled and is forever categorizing and tagging downloaded data incorrectly. Because it didn't flag these guesses, we kept missing errors. That's the only reason I switched to QuickBooks, which is starting to feel like taking the Space Shuttle to go buy groceries.