Profit and Loss statement is wrong or I don't understand...

So, I own a small C-corp and have used quicken forever. Yesterday, an anal retentive refi broker asked me for a p/l report for Q1 of 2021. My financial tracking needs are pretty basic. I have one primary customer, and one primary employee (me). So, the transactions are pretty basic: monthly income, wages, taxes, and a monthly expense report.

Fair disclosure - I started using Quicken as a personal tool and upgraded to the home and business years ago. I pretty much went with the categories in existence plus whatever Quicken included by default. I'm an electrical engineer, not an accountant, so I suspect I just don't understand the report I am looking at.

When I run the p/l report, the income is correct, but the taxes show up as income? I'm also missing monthly expenses. Attached is an edited screen capture.

Are there defaults for how the p/l collects the data? I haven't found these yet. All of the accounts in the report are tagged as business related. The other starter question I have - why do my tax payments offset my wages? I guess in a p/l statement, I would expect to start with income and subtract taxes, wages and expenses. Why is the overall total a sum?

Appreciate and insight.
pl.jpg 36.8K

Best Answer

  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    Accepted Answer
    Hi @Charlie2640

    So, I took a look at the P&L report you attached.  The major problem with it right now isn't that "the taxes show up as income", the actual problem is that there are 29,844.39 of "wages" that are showing up as a negative expense (or effectively as income) which is clearly wrong.  So the first thing you need to look into is why that's happening.  In addition, if those are personal taxes that are being withheld from your wages, they also should not be on the P&L of the S Corp, because they are personal taxes.  The only taxes that would be reported on the P&L would be the employer share of payroll taxes and other taxes on the S Corp.

    On the monthly expenses - the likely cause is that you may not be using categories that are "Business Expenses" or have not properly classifies the categories as Business Expenses.  There are a large number of pre-classifies expense categories that you should only use for S Corp expenses, and you can add new ones manually as well.  See the below Snip for what that section of the Category List looks like:


    Let me know if you have any followups.

    Frankx


                           Quicken H&B-Subscription - Windows 10 Home - Ver. 2004
                                             - - - - Quicken User since 1984 - - - 
      -  If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you.  -

Answers

  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    Accepted Answer
    Hi @Charlie2640

    So, I took a look at the P&L report you attached.  The major problem with it right now isn't that "the taxes show up as income", the actual problem is that there are 29,844.39 of "wages" that are showing up as a negative expense (or effectively as income) which is clearly wrong.  So the first thing you need to look into is why that's happening.  In addition, if those are personal taxes that are being withheld from your wages, they also should not be on the P&L of the S Corp, because they are personal taxes.  The only taxes that would be reported on the P&L would be the employer share of payroll taxes and other taxes on the S Corp.

    On the monthly expenses - the likely cause is that you may not be using categories that are "Business Expenses" or have not properly classifies the categories as Business Expenses.  There are a large number of pre-classifies expense categories that you should only use for S Corp expenses, and you can add new ones manually as well.  See the below Snip for what that section of the Category List looks like:


    Let me know if you have any followups.

    Frankx


                           Quicken H&B-Subscription - Windows 10 Home - Ver. 2004
                                             - - - - Quicken User since 1984 - - - 
      -  If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you.  -
  • Charlie2640
    Charlie2640 Member ✭✭
    Frankx - thanks, I'll go take a look. It's a c-corp, but I understand the s-corp comment. I figured it was a category snafu somewhere.
  • Charlie2640
    Charlie2640 Member ✭✭
    Okay, Frankx hit the nail on the head. My business categories are completely mingled with my personal categories. Whooo boy. I'll whip up something manually and put this on my todo list to clean up.
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