what do I do to record transfers between accounts?

My income goes into one account. From there, funds get transferred to a separate account to hold for income tax and to another account for my personal money. These transfers are showing up as income exaggerating actual income. Very hard to track income. I have read some instructions about what to do but I just don't get it.

Should I (or can I ) simply delete them? It doesnt feel right but its such a pain screwing around with it.

Why is there a transfer category option?

I'm very new and am just trying to track my own small service business

Thanks for any advice or guidance

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Answers

  • Bob_L
    Bob_L SuperUser ✭✭✭✭✭
    edited June 2020
    Assuming your income is deposited to your checking account and the tax savings is deposited to a savings account called tax savings then you create a deposit transaction in the checking account.  First line is categorized as gross income with the total amount, second line is categorized as a transfer to tax savings account as a negative amount, third line is transfer to personal savings.  The checking account balance will then increase by the net difference.
     
    Is this the way cash is actually being handled, or is the tax amount being booked as an accrual category for taxes?  If so then the expense tax category would be used  instead of a transfer but that gets into the business side that involves home and business reporting.

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