How do I categorize wages transferred from Business account to Personal account ?

steve150@

If I just transfer it to my Personal Checking Acc't I have no way to categorize it as a wage. IRS probably wouldn't like that.

If I put Wage as the Category in the Business Checking it doesn't show up in my Personal Checking.

Thanks

NotACPA

Does your business file it's own tax return ... or is it included in YOUR tax return (probably on Sched C).

If on Sched C, then there's NO INCOME to you from this transaction.  You and the business are considered to be a Single Tax Entity, and all  that you've done is to transfer funds from your business pocket to your personal pocket ... which is not different that moving your wallet from one pocket to another.  These funds would be taxable as part of your business and not separately taxable to you personally.

IF the business files it's own tax return, then it should be in it's own Q data file, where this transactions would be recorded as an Expense (with a category similar to 'Wages') and in your file with an Income category.

steve150@

The business files it's own return yes. I just create a report to send to the Accountant.
I've been Categorizing the transaction as an expense - "Wages" - in the Business Account for a few years.

I am trying to add my Personal Checking into the mix now.

In order to get the transfer to show in my personal checking I've got to use [Personal Checking] in the Business Account Category.
Which shows up as - [Business Checking] - in my Personal Account Category.
No room to work "Wages" in there as far as I can see.

I'm kind of believing I'll just have to continue using the Expense-Wages category like I've been doing.
Then manually adding the Deposit into my personal account.

Just wondering how others deal with this.


Thanks

NotACPA

You business should have it's own, separate Q data file.

A Q data file should have ALL of the finances for a single tax entity ... and ONLY the finances for that entity.

It's your mixing of tax entities in a single Q data file that's causing your difficulty.

Chris_QPW

Even though I totally agree with @NotACPA the business accounts should be in a separate data file it seems to me that you can also fix your problem by treating the transactions as if they were in different data files.  As in they shouldn't be a transfer.  In the business account it would be something like paid wages category and it is a withdrawal.

And then in the personal account it would be a deposit to some kind of income category.

steve150@

That's what I meant about manually entering the deposit.

Business is a family farm. I'm the only employee.
So this was never about saving that much work.
Just wondered if there was another way to do it.


Thanks