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Royd
Level 1

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

Currently I have Mutual Funds and Stocks setup as Current Assets>Investments. When I purchase a fund with my bank account, should I use expense or transfer? How does it affect the profit & loss, balance sheet and cash flow reports doing it one way or the other?

Solved
Best answer September 26, 2019

Best Answers
Rustler
Level 15

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

The truth is QB is totally unsuited for investing

use quicken, I have no experience with mint in this area so I am not sure it will work

If this is  a company investment account, keep the total asset cost in QB, but track purchase, splits, dividends, return of capital, reverse splits, spin offs, mergers, etc etc in quicken and just make total entries in QB

View solution in original post

14 Comments 14
Rustler
Level 15

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

The truth is QB is totally unsuited for investing

use quicken, I have no experience with mint in this area so I am not sure it will work

If this is  a company investment account, keep the total asset cost in QB, but track purchase, splits, dividends, return of capital, reverse splits, spin offs, mergers, etc etc in quicken and just make total entries in QB

View solution in original post

john-pero
Community Champion

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

john-pero
Community Champion

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

As far as the actual transaction you do in QB it is better to use Expense even though it is not an expense - this way you can identify the brokerage house as the vendor or even the fund name, but the posting is the purchase of an asset so it is not going to affect P&L
qbteachmt
Level 15

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

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.

asha_kanta_sharma
Level 6

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

Agree...completely resonate your views.

 

Very well explained.

 

Thanks

VJDS
Level 1

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

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

john-pero
Community Champion

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

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.

Triangle Cap
Level 2

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

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?

itorres
Level 1

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

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)

aa45
Level 1

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

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

john-pero
Community Champion

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

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

Illinois_Farmer
Level 2

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

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.  

Bookkeeping Mom
Level 1

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

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!

Mark_R
QuickBooks Team

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

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: 

 

 

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.