How do I enter a personal deposits to my business account without it showing as additional income?

6830512

I have a small business and I enter rental deposits into Quicken Home for tax purposes. At times, I have to deposit my own cash into the business account to keep it running. How do I enter these deposits without it showing up as additional income (money that I have already paid taxes on once). I somehow need a business income and somewhere else to show my personal money has been deposited.

Signed,
Help Me! This is driving me crazy.

Frankx

Hi @6830512,

So the short answer to your question is that when you "deposit my own cash into the business account" that is making a personal loan to your business ( or could also be considered making an "investment" into your business) and should never be counted as income.

When you make an entry to record rent received from tenants, the entry is as follows:

Dr Bank Account             500.00
Cr Rental Income                              500.00

When you make an entry to record money you lend to the business, the entry is as follows:

Dr Bank Account             500.00
Cr Loan from Owner                         500.00

From what you said above it seems that you may be using the total of deposits made into a business bank account to determine your business income, rather than the total amount in your rental income account.

Let me know if you have any questions.

Frankx 

Tom Young

"How" are these transfers of cash showing up in reports as "income"?  If the line item in the report reads "From [Name of Non-Business Checking Account], then that's a simple matter of customizing the report to eliminate transfers between Accounts from showing up in the report as a form of income or expense.  You do that under the "Advanced" tab of the report customization function.

I wouldn't think that these transfers of cash would show up as a form of "Rental Income" as the basic accounting for a transfer is:

Debit (increase) Business Checking Account  $XXX
Credit (decrease) Personal Checking Account $XXX

but since I don't use the Home and Business version of Quicken I don't know if some rental "wizard" is a work, somehow, in this situation.  My response is based on the fundamental accounting for a transfer of cash.

Frankx

Hi @6830512,

So the short answer to your question is that when you "deposit my own cash into the business account" that is making a personal loan to your business ( or could also be considered making an "investment" into your business) and should never be counted as income.

When you make an entry to record rent received from tenants, the entry is as follows:

Dr Bank Account             500.00
Cr Rental Income                              500.00

When you make an entry to record money you lend to the business, the entry is as follows:

Dr Bank Account             500.00
Cr Loan from Owner                         500.00

From what you said above it seems that you may be using the total of deposits made into a business bank account to determine your business income, rather than the total amount in your rental income account.

Let me know if you have any questions.

Frankx 

Tom Young

@Frankx

I'll disagree with your accounting here on your second entry. 

All the activity within 6830512's Quicken file pertains to all of 6830512's financial transactions, including the business activities.  There is no separation, no distinction, between 6830512's "personal" financial activities - depositing his paycheck, buying groceries, subscribing to the local newspaper, etc. - and his "business" activities - depositing rent checks received, paying the property taxes on the rental home, hiring a handy man to unclog the toilet, etc.  In this context moving cash out of personal checking Account to a business checking Account within that file is absolutely no different than moving cash out of a personal checking Account to a personal savings Account; it's all 6830512's cash and your second entry doesn't account for this. 

Your second entry, (where the second leg of the entry really should be titled "Loan to Business Owner"), suggest that somewhere, outside of 6830512's Quicken file, some other entity is making an offsetting entry along the lines of

Debit (increase) Business Checking Account  $500.00
Credit (increase) Loan from Owner                  $500.00

but that outside entity doesn't exist outside of 6830512's Quicken file.

Frankx

@ Tom Young,

This is basic bookkeeping.  The second entry records the loan, pure and simple. 

It allows the "owner" to know how much he contributed to the business over time.  There is no suggestion anywhere in what I said  "that somewhere, outside of 6830512's Quicken file, some other entity is making an offsetting entry".  

Frankx

Tom Young

@Frankx

Well, then I have to ask you: where is the cash - a real deposit - recorded in the business' checking Account? 

Frankx

@ Tom Young,

You are punking me right???   Hahaha 

Tom Young

@Frankx

You're right about that, I was mentally making the reverse entry.  So now the question is: where is the reduction in 6830512's personal checking Account?  "Bank Account" in your entry is the business' Account, right?

Frankx

Yes the "Bank Account" is the business bank account (assuming that the OP doesn't operate out of a single bank account).  The second entry just shows the OP how to set-up the accounting for tracking the loans he makes to his business.  So, whether he wrote a check out of a personal checking account, or used cash out of his socks drawer to make the deposit, it doesn't matter.

Tom Young

@Frankx

But that personal checking Account is in the same file as the business checking Account.  Where's that entry?

Frankx

Okay - I'll try one last time...  From my 1st message to the OP above:

The OP said: when you "deposit my own cash into the business account" that is making a personal loan to your business ( or could also be considered making an "investment" into your business) 

I indicated the entry for that is:   When you make an entry to record money you lend to the business, the entry is as follows:

Dr Bank Account             500.00
Cr Loan from Owner                         500.00

Tom Young

The complete quote is "At times, I have to deposit my own cash into the business account to keep it running. How do I enter these deposits without it showing up as additional income (money that I have already paid taxes on once)."  (Emphasis added.)

Presumably that money is coming out of the owner's "personal" checking account which, presumably, is in the same Quicken file as the "business" checking account.  So where is the withdrawal?

The only way your accounting makes sense is if you assume that the OP has two Quicken files, one for "him" and one for his "business."  In that case the 2nd entry makes perfect sense and that's why you'd expect that the owner, in his Quicken file, would make an entry for the disbursement recording a receivable from the business.  But you shot that notion down earlier with your "no suggestion anywhere in what I said  'that somewhere, outside of 6830512's Quicken file, some other entity is making an offsetting entry'" statement.

So I'll try one last time... Where is the disbursement entry to 6830512's personal checking account for the cash he's "lent" the business?