If I'm not mistaken, I believe that in order to have a Category (income or expense) show up on the Business P&L, that particular Category has to be associated with a line item on Schedule C.
Actually, I believe as the OP posted, the expense just needs a business tag and not a business category.
Does the transaction I add a business tag to need to be in a business account?No. One of the advantages of business tags is that they let Quicken know that the transactions that include them belong to a business, even if the transaction is recorded in a personal account instead of a business account.
https://help.quicken.com/display/WIN/Tell%2Bme%2Babout%2Bhow%2Btags%2Bwork%2Bwith%2Bbusinesses