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Can I enter business bills as one-step?

GrapeGrower

Do I always have to enter a vendor invoice and then make a vendor payment? Can't I enter a check written or record an EFT transaction in one step? Not every expense is an invoice.

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UKR

GrapeGrower said:

Do I always have to enter a vendor invoice and then make a vendor payment? Can't I enter a check written or record an EFT transaction in one step? Not every expense is an invoice.

Allow me to summarize the various answers:

You can, of course, create a Vendor Invoice and a Vendor Payment transaction for your office supplies purchase. Doesn't matter if you pay cash, check or credit card.
But you don't have to do so. You can enter a single transaction directly into your checking account, for example. Just make sure it's categorized to one of the Business Expense categories.
This single transaction can be tagged with your business tag, but it doesn't have to be if you only have one business defined in Quicken and/or if the business is marked as "Default Business" in Manage Business Information.
An old-style alternative to entering tags directly in the Tag field is to type it into the Category field in this format: category name/tag name
If your account register doesn't display the Tag column, I recommend you add it using the Register Columns gear icon in the transaction register.
If you're using a 1-line-per-transaction account register and adding the Tag column makes it a little crowded, use a 2-lines-per-transaction register view. To toggle between 1- and 2-line modes press CTRL-2

All comments

Jeff Bowman

Hi @GrapeGrower ,

No, you do not have to record an invoice then make a payment. If you write a check at the offices supply, yes you could enter the receipt and "pay" the bill, but you could just as easily record the check/credit card for the offices supplies category in one step, especially since (in this case) or when the bill and its payment occur at the same time. Some bills, for example insurances, are paid in the current month, but coverage begins in the following month. Others, like utilities, are paid in the current/next month for the previous month. In these cases, bills and vendor payments are usually better, particularly in cash flow and tracking.

Ultimately, you'll want to talk to your accountant about (in your case) whether income and expenses are "recognized", in accountant speak this is called "cash vs accrual basis". Most businesses are cash basis but may be considered accrual, unless they carry an inventory, then those businesses are automatically accrual basis.

Regardless, your accountant will be able to best guide you for your circumstance.

GrapeGrower

Thank you for your response.

I guess I should have been more specific. I want to enter a check written, say, at the office supply store, but in entering the expense in the check register there's no way to record the tag, just the category. So how will Quicken know that this is a BUSINESS office expense, not just a personal office expense?

You also answered a question I hadn't thought to ask yet: about timing issues. Given that Quicken is at its heart a cash-basis system, I can see that using the two step vendor form/payment is required to deal with accounting dates other than the payment date.

GeoffG

GrapeGrower said:
I guess I should have been more specific. I want to enter a check written, say, at the office supply store, but in entering the expense in the check register there's no way to record the tag, just the category. So how will Quicken know that this is a BUSINESS office expense, not just a personal office expense?
After selecting the category, add “/“ followed by the tag you want.

GrapeGrower

Thanks. That's nowhere in the tutorials or FAQs.... Ted

volvogirl

You can add a Tag column to your register. I don't have it in my main checking account but use it in other accounts that a lot of business deposits and expenses. I use Tags to track the individual jobs/clients not to separate personal and business.

You should have separate Business Categories set up. One thing I like to tell business people when starting out is...

For an income or expense category to show up under Business you have to assign it a Schedule C tax line number. Go into Edit Category and assign it one. If you need to see a schedule C, here's the blank form….
http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Jeff Bowman

Hi @GrapeGrower,

General consensus is that combining personal and business transactions in one bookkeeping data file (regardless of the program, E.G. Quicken) is NOT considered good practice. Of course, I understand the convenience/ability to easily "transfer" funds between business and personal accounts, as well as having a single accounting repository for all things money, whether business or personal. That having been said, and as big of a PITA it is, best practice is to have MULTIPLE bookkeeping files, that is one Quicken .QDF file for personal, one .QDF for Business, and if you have multiple businesses (or properties, LLC's, etc.) each should have its own .QDF. In the case of multiple LLC's, or where you have different Federal tax ID numbers (FEIN's) for each entity, this is more of a requirement for tax filing purposes than a best practice. And, Yes while a single .QDF can handle multiple properties, a discussion with ones property attorney regarding the advantages (vis-a-vis liability) of "One property, One LLC" (thus One LLC, One .QDF) would be highly recommended.

The biggest (and most cited) reason for SEPARATE accounting files is in the event of an audit: the IRS can request all accounting files, including digitally based files, usually for a given period and entity -- of course you're always permitted to provide the IRS with more information than they request. Quicken data date ranges is difficult (but not impossible) to parse out, but mixed accounts and categories are even more so. Understandably, this results in providing much more unrequested information for the IRS' perusal.

GrapeGrower

Thanks for the input. As it happens, this is a very informal side business: a vineyard, with outsourced labor and management, leased land. I write 25 checks a year and eventually will receive 4, and file Schedule F. I hear your concern for co-mingling, but for now, one file ought to suffice. Thanks.

NotACPA

"combining personal and business transactions in one bookkeeping data file (regardless of the program, E.G. Quicken) is NOT considered good practice. "

HORSE HOCKEY.

If the business transactions appear on your PERSONAL tax return (such as Schedule C, D E or F)... they belong in the same Q data file as your personal transactions.

If the business files a separate tax return, then you should have a separate Q data file.

THAT'S the proper criteria ... not a simplistic "business vs. personal".

And, as you can read below, I'm a former bank Audit VP.

volvogirl

DITTO, if you file it as a sole proprietor or Single Member LLC or schedule C or F in your personal tax return then it should be in the same Quicken file as your personal accounts.

NotACPA

BTW, if the IRS decides to audit you (the great threat cited above) then they're going to audit ALL of you.

And having filed a Sched C, D, E, or F, the IRS is going to include the info from those returns in their audit. A "separate Q data file" will, in this scenario, offer NO PROTECTION!

UKR

GrapeGrower said:

Do I always have to enter a vendor invoice and then make a vendor payment? Can't I enter a check written or record an EFT transaction in one step? Not every expense is an invoice.

Allow me to summarize the various answers:

You can, of course, create a Vendor Invoice and a Vendor Payment transaction for your office supplies purchase. Doesn't matter if you pay cash, check or credit card.
But you don't have to do so. You can enter a single transaction directly into your checking account, for example. Just make sure it's categorized to one of the Business Expense categories.
This single transaction can be tagged with your business tag, but it doesn't have to be if you only have one business defined in Quicken and/or if the business is marked as "Default Business" in Manage Business Information.
An old-style alternative to entering tags directly in the Tag field is to type it into the Category field in this format: category name/tag name
If your account register doesn't display the Tag column, I recommend you add it using the Register Columns gear icon in the transaction register.
If you're using a 1-line-per-transaction account register and adding the Tag column makes it a little crowded, use a 2-lines-per-transaction register view. To toggle between 1- and 2-line modes press CTRL-2

GrapeGrower

Clear summary. Thanks.