How do I input transactions for buying stocks or investing in mutual funds - expense or transfer?

Stocks and mutual fund investments are assets. If your business buys and sells then you have purchased an asset to hold. Purchase price plus any fees. Never adjust value (basis) due to market fluctuations. QB is not designed to be a market tracker.

When you sell your receipt minus fees, minus book value of stock is your capital gain. Depends on your country laws, but here 1 year or less held is short term gain taxable at an individual's marginal tax rate. Longer than 1 year is long term capital gain with a different flat rate of taxation on the gain.

An example: al in US dollars: I buy 100 shares of Tata Motors (TTM on NYSE) at $22.15 through eTrade but I am a slow investor, less than 30 transactions per quarter, $6.95 per transaction (4,95 if over 30) My cost for these shares is 2215+6.95= $2221.95

Say it goes up to $25 and i sell, I get $2500-$6.95 or $2493.05 less my basis of $2221.95 results in a gain of $271.10 Say it dropped to $20 and I got nervous and sold, I receive $2000 - - $6.95 or $1993.05 a capital loss of $222.90. Neither transaction really results in income or expense but in gain or loss. Length held determines short or long. Tax treatment will determine where to claim and if the loss can even be used to offset other income.

Now, after all that, if this is the business money being invested and the stocks are owned by the business go ahead and run it through your company books. If it is personal investing it has no place in QuickBooks. QuickBooks is not personal finance software

I use Quicken exactly for this reason. It has the tools built it, for lot purchases and sales, investment earnings as dividends or return of equity or reinvestment, stock splits, conversions, FMV updates, etc.

If you intend to do this with any QB tool, you will need to be doing manual entries and only for Realized gain/loss, as well. I do advise you to use a noninventory item for this, so you can include quantity.

I really do not know much about the India stock exchange.

Agree...completely resonate your views.

Very well explained.

Thanks

How would I record the total transaction for sale  + commission, Buy + commission, gain and loss.

If you are going to track stocks with Quickbooks (which is not recommended since generally purchase and holding of stocks is not a business but personsl set of transactions, then you trsck them as an asset whose purchase price includes all you paid to acquire the stocks, including transaction fees. This is your basis. When you sell you record the sales price against the asset value and then reduce this amount by selling fees. You remove the remaining asset value , + or - , to gain or loss.

The complicating factors are that rarely is the purchase or holding and sale of stocks considered part of any business. You might be a day trader but that day trading has no place in any other business. Itt is free standing personal investment,  most likely.

If uou use business money to purchase this is owner draw, if you usd personal funds but trzck in QB it is owner contribution. Correspondingly, sale proceeds may be owner draw or contribution.

My business bought into another business as a partner by paying each pre-existing partner. How do I record those transactions (checks were written, from my business accounts)? Expense? Asset?

Hello John

I agree 100% with you explanation. 

In case that I use QB as a record bookkeeping. I receive a bank statement from my broker company (in my case TD Ameritrade); so, what accounting method do you recommend me (cash or accrual)

Hello, how can I recognize the profit of stocks that purchased for company such as bitcoin, without increasing in the amount of stocks?
please help me

If your company invests in stocks or bonds or any other item that appreciates (or depreciates) based solely on market value fluctuations you keep track of your acquisition basis only until you sell. If you invest $30,000 in a single bitcoin that is an asset that cannot be deducted as an expense until you sell it. If you sell in less than a year and you earn a profit that profit is taxed at your business rate (you may be a pass through entity) but if you hold it longer than a year your profit will be treated as long term capital gain.  When you sell you post the price received and subtract your basis to reflect gain

Great explanation, John. Thank you.   My farm business has a savings account and I put the money into a Fidelity account and I buy dividend-earning funds.  Thus, equity investments are a real part of business assets. 

It is too bad that Intuit is so stove-piped having features in one program,  like Quicken, that are totally absent in a more "full-featured" program,  like Quickbooks.   Sad that Quickbooks Desktop doesn't have the same features of Quickbooks On-line, too.

I want to track all farm accounts in one program so I can print complete balance sheets and income statements regularly from one accounting program.  

I think your recommendation to set up asset accounts for the mutual fund and ETFs is very logical.  I'm going to try setting up subaccounts under a "Fidelity" asset account for the money market and each mutual fund, then use realized gains and losses when I sell, along with a  dividend income account.  I didn't like marking to market in Quicken anyway.

I don't know if I can set up subaccounts for assets in QB Pro, but I will find out shortly!!  I just transitioned my accounting from Quicken to Quickbooks Pro, so I am learning what QB Pro can do, and not do.

In addition,  many farmers have a commodity brokerage account, too, so once I reconcile the Fidelity account,  I need to go through my brokerage transactions for agricultural commodity options and figure out how to model them in QB  Pro.  

Thanks for all the great advice to the community.  

I'm at my wits end. I took over my sons bookkeeping and am currently using QB Online. My son was using his personal bank account for his business transactions as well as personal. That stopped immediately, however I have 18 months of chaos. He buys and sells stocks and I have no idea how to post these transactions since he uses that personal/business checking account. I've asked him to ask his accountant (several times) to no avail.

I'm hoping someone can assist me...please!

I've got your back, @Bookkeeping Mom.

In QuickBooks, we do not recommend mixing business and personal funds to avoid situations like this. However, since your son already used his personal bank account to pay for business expenses, you'll want to create a journal entry to record it in QuickBooks. Here's how:

1. Click the + New button, then select Journal entry.
2. In the first line, select the expense account for the purchase. Then, enter the amount under the Debits column.
3. On the second line, select Partner's equity or Owner's equity. Then, enter the same purchase amount in the Credits column.
4. Click Save and close.

Once done, you'll have to reimburse the personal expense by entering a check or an expense transaction. Let me guide you how.

1. Click the + New button, then select either Check or Expense.
2. Select a bank account to use to reimburse the personal funds.
3. In the category column, select partner's equity or owner's equity.
4. Enter the amount of the reimbursement.
5. Click Save and close.

Most importantly, I still encourage seeking help from your accountant for more guidance.

I'm adding these articles for more details: 

• Pay for business expenses with personal funds.
• Mixing business and personal funds.

Please let me know if you need clarification about this, or there's anything else I can do for you. I'll be standing by for your response. Have a great day.

Thanks John,

I have a similar case of my own. My company (C-Corp) used $50k to purchase stock of a public company. The purchase was directly to the company as it was a certificate offering. 

So far I have entered the stock as an asset (account type => Other Current Asset. Detail Type => Investments -Other). 

In your answer to Royd it was recommended to use the brokerage as the vendor. In my case is the vendor the company?

As this was a purchase directly to company that issued the stock, it was a wire out of my bank, to their bank. Should the wire fee be included in the cost basis of the stock?

Thank you for your help!

David

Thanks for the frank answer, I had come to the same conclusion re QuickBooks and tracking brokerage accounts but thought maybe I was just too dumb to figure it out. Sorry I'm a bit late to the game but "quick" <groan> question: wondering which version to buy, Quicken Starter, Deluxe or Premier? Keeping in mind I only want to track a brokerage account I opened in my company name and will continue to use QuickBooks for business accounting. I don't need to track my personal expenses.

I can only speak to the use of Quickbooks DESKTOP. I do NOT use Online version.

You can only track the cost basis of investments in QuickBooks. You input/set-up your brokerage account as a "bank" type account. Let's say your brokerage is Charles Schwab - that is what you name it. I then track the cash transactions in a sub-account called "Cash Transactions" and the Stocks I put in a sub-account, "Stocks".

When you reconcile the account each month, you notate your statement, where the stocks positions are listed, with the cost basis of each stock, and then add that to the "cash balance" in the account and that is your ending statement balance you will reconcile to.  Respond if you need further instructions....I've been doing this for 30 years in QuickBooks Desktop.

You know I'm not understanding on how I can transact to work with you 

what do you need help understanding with Quickbooks?

I'm new to bookkeeping and the company I work uses QB desktop.  The company has a checking account and Merrill Lynch mutual funds.  I transferred $50k from the checking to the Merrill Lynch acct by cutting a check which shows up as an expense on the Profit & Loss Statement.  How do I correct this?  Also, the prior bookkeeper was making adjusting entries every month based on the Merrill Lynch statement to reflect the increase/decrease in value on the Balance Sheet and Income/Expense on the Profit & Loss.  

Can you please share journal entry examples when investments change values? loss and gain..

thank you!