Trick to Separate Business from Personal Expenses in QuickBooks
Accountants always say not to mix personal and business expenses. Ideally, small businesses should have a business credit card in addition to a business checking account. However, in this day and age where points, airline miles, and cash back incentives reign supreme, it is hard to resist using certain cards for different types of spend. For example, there may be a card where a minimum total spend for the year qualifies for elite status on an airline and using that card for both personal and business expenses helps reach that milestone faster.
Of course, small business owners want to be careful not to include any personal expenses in business deductions. And misclassifying these transactions in QuickBooks, other than an Owner’s Draw or Loan to Shareholder, can have negative tax implications.
Here’s the trick
Add the credit card account to QuickBooks in Banking, or Bank Feed in desktop.
Exclude all personal transactions that are downloaded.
Pay off the “In QuickBooks” balance in full periodically by making a payment from the business checking account to the credit card account.
Reconcile the account, after the payment posts, to a zero ending balance.
Even if you pay off the credit card in full each month, it is important to pay the business portion separately and then make another payment from a personal checking account for the difference.
Don’t forget receipts
The IRS requires that receipts for all business deductions be kept for a minimum of 7 years. Unfortunately, most small businesses don’t save receipts and if they do, they are not organized in way that would help in an audit. Ideally, each expense would have a receipt attached to it in QuickBooks so that it can easily be found later. My Bookkeeping Client Portal is not only a great way to achieve this, but it can help in the process of separating business from personal expenses, too.
Pay Bills for Free in QuickBooks
There is now a newer, upgraded version of the bill payment capability in QuickBooks Online. Previously, there was a scaled-down version of Bill.com’s bill payment service, but it incurred a surcharge.
The new offering, powered by Melio, enables small businesses to pay bills directly within QuickBooks. The service is free if paying with a bank transfer or debit card. There is a fee, however, if you use a credit card, currently 2.9%.
This means that businesses no longer have to use checks with their bank’s routing and account number on them, which can be dangerous and subject to fraud. However, an actual check can still be issued with this service if a bank transfer (ACH) is not preferred or available, such as to an individual without a bank account.
Go Get Geek!'s Brett Barry Receives Insightful Accountant's 2020 Top 100 ProAdvisor Award
Go Get Geek! is pleased to announce that Brett Barry has been named a 2020 Top 100 ProAdvisor by Insightful Accountant, an independent news and information source written specifically for the small business advisor to keep up with current technology, trends in the industry and continuing their education.
This list recognizes the leading consultants who have embraced the ProAdvisor program and have leveraged it in order to better serve their clients and grow their own business. “We’d like to congratulate everyone who made this year’s list,” said Insightful Accountant Senior Technical Editor, William “Murph” Murphy.
I am so honored to have been chosen once again by my peers for this award! – Brett Barry
“This is the seventh year of our ProAdvisor awards,” said Insightful Accountant Publisher and Managing Partner, Gary DeHart. “The ProAdvisors who make this list are the best in the business. Any small business would be well-served working with any one of the winners on this list.
About Insightful Accountant: Insightful Accountant is an independent news and information source written specifically for the small business advisor who needs to stay current on the latest news and offerings in accounting technology; including updates from Intuit, Xero, Sage and the hundreds of add-on products serving the small business ecosystem. With news and insight specifically written to help the advisor better serve their clients while building their firm, Insightful Accountant is unlike any other news source serving this space.