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Quicken for Business Setup

JoelC

I am going to start using Quicken to track both my business transactions and my personal transaction. I have a few questions about the setup of the business portion.

Understanding Setup / Categories: It is my understanding that to fully use the business capabilities one needs to setup BUSINESS CATEGORIES and PERSONAL CATEGORIES as the the Business capabilities use the BUSINESS CATEGORIES for purposes of the dashboards, reporting, etc. Please confirm or correct my understanding.
Creating Categories: It is my understanding that a category becomes a BUSINESS CATEGORY (as opposed to a PERSONAL CATEGORY) by ticking the "Tax related category" box. Please confirm or correct my understanding and, if not correct, please explain how to create a BUSINESS CATEGORY.

And now the big one, setting up / transitioning categories as I have been a Quicken user since 1995 and have a number of categories that — because of the recent creation of a company — should be BUSINESS CATEGORIES on a go forward basis (i.e., Computer) as well as categories that can / will be both BUSINESS CATEGORIES and PERSONAL CATEGORIES on a go forward basis (i.e., car expenses). What is the best practice in this case / situation; for example:

1. Is it to leave the existing PERSONAL CATEGORIES as is (so as to not corrupt historical transactions) and create new BUSINESS CATEGORIES (even though this will mean there will duplicate categories [i.e., Computer as a BUSINESS CATEGORY and a PERSONAL CATEGORY)? If the answer is to create new / separate BUSINESS CATEGORIES then what is the nomenclature / structure that is best practice / suggested to keep the categories (and especially the duplicated categories) easy to use, identifiable, and separate?

2. Is it to leave the EXISTING PERSONAL CATEGORIES as is and use them in business register with the understanding that the business dashboard, business reports, etc. will not work though the reports can be created manually? This is my current situation!

3. Other.

I would like to know what the best practice / suggested approach is so as to avoid having to reconfigure everything twice to avoid extra work.

Thank you.

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Comments

Quicken Kristina

Hello @JoelC,

To answer your questions, your assumptions are correct. To get the most out of the business functionality, you will need to use Business Categories and make sure to assign the appropriate Tax Line Item to those categories.

To address your bigger question about setting up/transitioning categories, a lot of it is subjective, depending on how you intend to use the file and what data you need. It sounds like you plan on tracking both business and personal in the same file rather than in separate files. How much overlap is there with categories (eg how many categories currently contain both business and personal transactions)?

If there is very little overlap, or very few personal transactions would need to be manually edited if you change the category to business, then changing the existing category to business may be the simplest approach for that category.

If there is a ton of overlap, then it may be simpler to create new business categories and edit only the business transactions that you'll need to have reflecting correctly in reports (eg if you need only this year or only next year's transactions, then there's no need to edit older transactions…you'd just need to keep in mind that reports with older information may have some inaccuracies due to those older transactions).

When it comes to nomenclature, as a general rule, you would want to avoid using identical category names. Even though they'll show up in different sections (one as personal and the other as business), having identical names increases the odds of assigning transactions to the wrong one by mistake. Generally, you would want to have something short and simple to allow you to easily see which is business and which is personal. Perhaps the initials of the business name or using the letter "B" would work, or perhaps there is something else you would find more relevant.

I hope this helps!

volvogirl

Here is how I do mine. I don't have the business version or a new version, I'm on 2013 Premier.

You should set up business categories. Make sure to assign them to a schedule C line item number so they show up as business categories. I don't know what categories you would need but my husband is a Land Surveyor. Here's how I set mine up (I also put the Schedule C line number in as part of the name)...
Survey Income
Survey Expenses
……..11 Labor
……..18 Office Expense
……..20 Equip Rent
……..22 Supplies
……..24a Travel
……..27 Other - Printing
……..27 Other - Small Tools

I made the expenses sub-categories of the main Survey Expense category.

Also I use Tags for each job. Then when I run a report I can sort it by job. So an expense entry might look like this…
Survey Expenses:22 Supplies/Maple Street

To be included in business reports (and I don't know where else) you have to assign the category to a schedule C or E tax line item number. To check the tax line assignment open the Category list by either clicking on the Category Icon or go to Tools-Category List or Ctrl+Shift+C. Then select the category and right click on it to Edit it. Click on the Tax Reporting Tab and check the box for Tax related and pick a Schedule C or E: tax line item.

Chris_QPW

First off, I would like to state something in this post:

ticking the "Tax related category" box

Not exactly correct, it is the tax line assignment that makes it "business".

I notice that your other post was in Windows/Canadian. As such the "rules" of what tax line assignment makes something "business" will be different for Canadian tax reporting and maybe how Quicken handles things.

Basically, at this point Home and Business for Mac is so new I don't think there is anyone that has all the details on how it is all put together. The assumption will be that it works "similar" to the Windows version.

But right off the bat I can guess that it is going to be "different", just because the "extra features" that the Windows version have aren't in Quicken Mac.

For instance, I don't think that Quicken Mac has the tax planner. And I don't know what tax reports it has.

When you get right down to it, there are some "business" features like invoices and such that will be triggered by the category/tax line, and also the "business tag", but the real "tax reporting" is actually outside of the "business" features. So, what you will be able to see for "the tax" will largely depend on what tax features Quicken Mac has, and what tax lines it considers "business".

JoelC

https://community.quicken.com/discussion/comment/20400856#Comment_20400856

@Quicken Kristina , as a start, much thanks for yor response noting the following:

Business Categories: I understand that to create a Business Category one needs to assign the appropriate Tax Line item within the category. I took a detailed look at the Tax Line items and ran into a wall. I live in Canada and my company files a T2 and note that there are no Tax Line items that start with a T2. I will need to research whether the existing Tax Line items can be used.

Business and Personal Tracking: I have and will continue to track business and personal in the same file. I find this is necessary for a number of reasons including i) created consolidated network worth statements and ii) transferring funds from company to personal (i.e., pay) and from personal to company (i.e., shareholder loans).

Categories: I will give it more thought but for now I think the best approach is to change / freeze things as at December 31, 2023 meaning:

a) on or before December 31, 2023 keep the existing categories which are currently used for both personal and business tracking (so that all 2023 and earlier reports work and work in the same way) and

b) on and after January 1, 2024 create separate business categories and modify the report accordingly with the understanding that overtime the pre 2024 reporting will fall off as there is no interest / need in going that far back!

Category Naming / Nomenclature: If I create separate BUSINESS CATEGORIES then will Quicken default to entering / looking at those categories first; for example if I have a BUSINESS CATEGORY Computer:Software and a PERSONAL CATEGORY Computer:Software will Quicken know that a) when in a Business Account to enter / use the BUSINESS CATEGORY and b) when in a Personal Account to use the PERSONAL CATEGORY?

If the answer is no then I will likely start all BUSINESS CATEGORIES with the prefix "B" as you suggest.

If the answer is yes then I may use duplicate category names and risk grabbing the wrong category every now and then.

Category Reversal: If i go through the exercise of setting up separate BUSINESS CATEGORIES and come to the conclusion that my current approach is better / simpler for me is it easy to go back (i.e., is it easy to fold the newly created BUSINESS CATEGORIES in the existing PERSONAL CATEGORIES and if yes, then how?)

***

A huge thank you for your answers to my questions and help. I hope you appreciate that I want to make sure I have a VERY GOOD idea of what I am doing and getting myself into as i) I need / want to avoid wasted effort (i.e., I do not want to invest time unless I am confident it will improve my current methodology / tracking) ii) I need / want to avoid doing things twice and iii) I am very concerned about maintaining data integrity.

JoelC

@volvogirl , much thanks for the clarification on creating business categories and sharing your approach. I will certainly consider it.

JoelC

https://community.quicken.com/discussion/comment/20400874#Comment_20400874

@Chris_QPW , as a start much thanks for taking the time to respond noting:

Business Categories: Much thanks for the clarification on creating business categories. You are correct that I do live in Canada and, as noted above, I need to determine whether any of the listed tax line items are appropriate. There is a middle ground — they may be appropriate for purpose of tracking entries in Quicken (absent taxes owing) but not appropriate for determining my taxes owing due to the nature of my business (I hope this makes sense). This would be a win for me as all I want is to track my business, the tax liability can / will be determined by others (at least at this point).

Mac Versus Windows: I am currently run Quicken for Mac and Quicken for Windows in parallel waiting for the day that the Mac version will catch up to teh Windows version. The focus / questions here are for the Windows version of Quicken for Business as the Mac version of Quicken for Business is lacking a lot of functionality (having just being released) (ie., the is no invoicing, there is no A/R, there is no A/P, and so on). Hopefully the Mac version will get there.

Once again, much thanks.

UKR

After setting up your personal and business bank accounts in Quicken, to get started with setting up a small business start reading here: https://help.quicken.com/display/WIN/Business

JoelC

@UKR appreciated and thank you!

JoelC

I create invoices using Quicken with the typical invoice including i) professional fees ii) taxes and iii) expenses. The professional fees and expenses are assigned to their appropriate categories. The taxes are included in the invoice amount and "assigned/tracked" in a Quicken created tax account.

When I receive payment, Quicken transfers the amount of payment from the above a/r account to the checking account. The problem is that the amount transferred from the a/r account to the checking account does not reflect the splits / various components (i.e., I do not know how much of the amount transferred from the a/r account to the checking account is in respect of professional fees, taxes, or expense).

When it comes to tracking the payment (assuming the invoice has been paid in full) into the various components I have:

Amount paid (as reflected in the checking account)
Amount of tax owed (as reflected in the Quicken tax created account)

What I do not have is an easy way of determining the amount of expenses paid short of taking the difference between 1. and 2. or the specific expense paid (i.e., in the case when two or more expenses are entered as separate line items).

Would appreciate best practices / comments / thoughts for addressing this problem.

PS. I do not want to have to create a spreadsheet to track the components as that defeats the purpose of using Quicken!

Thank you!

UKR

A Business / Cash Flow report should give you a spreadsheet-like summary by Category for each month within the year.

Because each invoice line item is individually categorized, a Spending / Itemized Categories report, with Transaction Detail selected, should show you how much income or expense you had by category.

Unfortunately, there is no report specific to invoice line items and how much business you generated for each line item.

JoelC

@UKR Appreciate the response, I will take a close look when I get a moment.

Thank you!

JoelC

https://community.quicken.com/discussion/comment/20402062#Comment_20402062

The item that is missing and that I am looking for is a way to match the expense flow out and reimbursement flow in.

The flow out is recorded in the credit card account but the flow in is not recorded anywhere because the transfer from the a/r account to the cash out does not show the splits.

Would love to know how this is done.

Thank you.

mshiggins

All the following comments are based on the U.S. version of Quicken. I believe there are more similarities than differences with the Canadian version, but am unable to say exactly where all the differences are.

"When I receive payment, Quicken transfers the amount of payment from the above a/r account to the checking account. The problem is that the amount transferred from the a/r account to the checking account does not reflect the splits / various components (i.e., I do not know how much of the amount transferred from the a/r account to the checking account is in respect of professional fees, taxes, or expense)."

You track "income" in your A/R (Customer Invoices) account - not expenses. The invoices In your A/R account are where your income is recorded. The only role invoice payment transactions play in the "income" determination is whether and when income is realized.

[You can track "expenses" using some combination of A/P (Vendor Invoices) accounts, and just plain register transactions.]

When income is recognized depends on whether you use the "cash basis" or the "accrual basis". That choice can be made for the file as a whole at Edit > Preferences > Reports and Graphs. Each report (and, therefore, the graphs that accompany those reports) can be individually designated to use the cash or accrual basis - see the Advanced tab of the Customize dialog.
[Where no separate "basis" selection is available, the file default (in Preferences) is used.]

If you use the "cash basis", your income will be realized when an invoice is paid. If the invoice is not paid in full, the "income" from the payment is distributed among the invoice line items in proportion to their percentage of the total invoice amount (after sales tax, if any, is subtracted from the payment amount).

Cash basis is selected by default in a New Quicken file.

If you use the "accrual basis", 100% of the invoice amount is recognized as income on the date of the invoice.

To see this, run the Business > Profit and Loss Statement. To examine the transactions that make up a line in the P&L report, double-click on an amount in the report.

-JP

JoelC

@mshiggins , appreciate your response noting that the Canadian version and the US version are indeed very similar.

I agree that i) income is tracked in the A/R account and ii) income realization is tracked by the transfer from the A/R account to the cash account.

The issue / what I am trying to do is create a report that shows i) the expenses incurred ii) the expenses paid / reimbursed and iii) the balance / difference which will hopefully be nil.

The reporting / tracking of the incurred expense is easy as you note (i.e., a combination of A/P and cash account register entries).

The reporting / tracking of the paid / reimbursed expenses is difficult noting I still need to test. While I need to test whether I can run a report detailing these expenses from the A/R account I would appreciate any ideas / thoughts on this.

I hope the above explanation is clear!

mshiggins

Not totally sure I follow you.

I'll try using an example to see how close I am; if it's not what you're looking for, perhaps you can supply an example of your own.

Suppose you sell Widgets and you ship those widgets to the customer, which costs you money. So your invoice includes a line item for the Widget and another line item for the shipping charge, which you have already paid.

Assume the shipping expense you incurred was charged to the Category, "Shipping". Then the invoice line item for shipping should also be charged to the Category, "Shipping".

If the invoice, which included a charge for shipping, has been paid in full, then it stands to reason that the shipping charge has been paid in full.

If you want to see the shipping expenses and the shipping reimbursements together in detail, I suspect there are several reports that can do that.bOne of the most versatile Quicken reports in the Banking > Transaction report.

If you Customize the Banking > Transaction report to include only accounts of interest - A/R, A/P and others (such as a Business checking account) as necessary - and Subtotal the report on Category; you should see all the transactions for every Category that qualifies for the report (including "Shipping") grouped together, with a subtotal for each category ... which, for shipping, you want to be $0.00 (excluding Shipping charges in unpaid invoices).

If that doesn't cover your issue, see if you can provide some more detail about what you want.

-JP

JoelC

@mshiggins appreciate you taking the time to respond!

Great job on summarizing the issue!

The one thing that you are missing is the payment of the shipping charge!

While the report combining the A/P and A/R accounts will show the shipping charge as being incurred (in the A/P account) and being invoiced (in the A/R account) and this netting out to zero it does not indicate / show that it has been paid.

Worth noting, the missing item / link as you suggest may the indication that the invoice has been paid in full?

Thank you.

mshiggins

"While the report combining the A/P and A/R accounts will show the shipping charge as being incurred (in the A/P account) and being invoiced (in the A/R account) and this netting out to zero it does not indicate / show that it has been paid."

I guess I didn't really go into enough detail in my previous post; but unless there is some significant difference between the U.S. and Canadian versions in this area, evidence that a shipping charge (for example) has been paid should be readily available.

[I think it might help if you can clarify whether the Canadian version has "basis" options ("cash" or "accrual"). If the Canadian version does not offer a choice of "basis", my guess is that it always uses the "cash basis". As noted in an earlier post in this discussion, when using the "cash basis", A/R invoices are not income, and A/P invoices are not expenses, until the invoices are paid. When using the "accrual basis" all invoices become income (or expense) when recorded.]

When an invoice has been paid in full in A/P accounts (as in A/R accounts), its "Cleared Status" changes from blank to "c". So when viewing reports containing individual transactions, you can easily determine whether an invoice has been paid in full.

In reports such as the Profit and Loss Statement, which does not display individual transactions; when using the cash basis, invoices (A/R or A/P) will not appear until paid.

If you recorded an A/P invoice for a shipping charge, but did not record a payment for that charge, the charge would not be included in the Profit and Loss Statement. Likewise your A/R invoices will not show income for unpaid invoices.

But if you recorded your payment to the shipping vendor's A/P invoice, that payment will appear in the P&L. Just as your customer invoice will appear in the P&L when it has been paid. If all invoices of shipping expenses have been paid and all invoices containing shipping charges have been paid, there should be a line in the P&L for "Shipping Charges" with a value of zero. If Shipping Charges is not zero, you should be able to drill down (double-click) on the amount in that line and see the transactions that make up the amount.

[Any "expenses" paid directly (not via A/P invoices) should be treated as "paid" by Quicken as soon as they are recorded, regardless of "basis", or Cleared Status.]

-JP

JoelC

@mshiggins , again, appreciate you taking the time to respond.

Canada does have the concept of accrual based and cash based accounting. The Canadian version of Quicken for Windows supports both accounting bases.

I thank you for your response which makes perfect sense. I will dig into it more over the next few days to make sure I fully understand Quicken's reporting (and come back with any further questions).

One follow up with respect to the last paragraph you posted which appears immediately below.

Any "expenses" paid directly (not via A/P invoices) should be treated as "paid" by Quicken as soon as they are recorded, regardless of "basis", or Cleared Status.

Please confirm / correct my understanding of it which is that "expenses entered / paid in cash account (as opposed to the A/P account) will be treat as incurred / paid as of their recorded date regardless of i) whether accrual based or cash based accounting is used and ii) whether their status is cleared". Is this correct?

Thank you for the assistance.

mshiggins

"Please confirm / correct my understanding of it which is that "expenses entered / paid in cash account (as opposed to the A/P account) will be treat as incurred / paid as of their recorded date regardless of i) whether accrual based or cash based accounting is used and ii) whether their status is cleared". Is this correct?"

Correct.

-JP

JoelC

https://community.quicken.com/discussion/comment/20402685#Comment_20402685

Thank you!

DevNull

I use a Quicken instance to track rental properties. A couple tips for you too evaluate:

Reports - live by them or die by them 🤑 By using the below info, you can get rather fine grained and discern each business entity readily at tax time. I can use these to send a summary and detailed spreadsheet to a client's accountant.

Tags - I use them extensively and they are great for reports for include/exclude. In my case, each property and or client has a unique Tag name (XYZ), including the business (ABC). These become the super-set for reporting purposes.

Categories - Recall they can be "nested", i.e. can contain subcategories. One thing I do is to create a series for the client(s) company. So I create a XYZ Income and XYZ Expense category, then create new categories as subcategories in each. EX: XYZ:repairs, XYZ:Rental Income etc. I do similar for the business (ABC). Since the business and the client(s) each have nested subcategories, each category can be associated to the correct tax schedule for the respective entity.

Expenses - can be both negative (payment) and positive (deposit) - EX: I pay the utilities on a property and the tenant pays me back. When I pay it is recorded as an expense, which I Tag to the property as an expense (payment), XYZ:Utilities. When the tenant pays me the rent&utilites, I record it as a split between XYZ:Incoming rent (deposit) and XYX:Utilities (deposit) with the associated Property tag. NOTE: I presume most use invoicing instead of deposits into expense categories. Yes, Virginia, a split deposit could span business entities. EX: $X to XYZ:Incoming rent and $Y to ABC:Repair Income.

Expense to Income conversion - create a separate (fake) checking account. FWIW: I jokingly refer to it as my "money laundering" account. EX: I charge my client a monthly fee per property. I deduct it as XYZ:Management Fee as an expense against the property Tag, yet the money never physically leaves the account at the bank. I use the fake account to transform it to income for my business. I create an entry in the fake account as a split, i.e. a line for each property they own (Tag) and categorize it as an income for my business ABC:Income:Mgt Fee. Then I do a simple xfer back to the original checking account for the total amount without tags or categories . The critical check/balance is that the fake account should remain zero balance after the last step and the business account would be restored to balance. As such, the fake account only has 2 entries per cycle, be it monthly, quarterly or what not.

Quicken Windows (US) since 1998 or so

JoelC

@DevNull, appreciate teh information share noting I either have or am in the process of incorporating everything that you noted.

Thank you!

PS. I do find that there is a trade off between granularity and time, each user will find their "happy spot"!

DevNull

https://community.quicken.com/profile/JoelC I agree on the "happy spot". I try to find the balance/difference between. things I do seldom vs things I do a lot. EX: setting up nested Categories is once versus recording expenses/income often. EX: Memorized Transactions, especially for routine payments and especially for routine splits. Though it is a bit of a pain to clear out old memorized payees from time to time. Tools —> Memorized Payee List - i.e. "spring cleaning", but Quicken makes it rather easy.

Looking back on the nested categories point; I initially did that before Tags were even a thing. As such, it is likely that you could use the same nested categories across clients/properties - assuming everyone is in the same tax jurisdiction - thanks to Tags. I still maintain a separate stack between my business and client side business. One other reason I did that was so I could delete all the default Categories, but I never did because, they do provide good examples for what goes to which tax schedule ;-)

JoelC

@DevNull , appreciate the response.

I find that when working with any database (which is what Quicken is) there is a continuous need for "spring cleaning". The challenge / issue is that certain things are easy to clean up (i.e., Memorized Payee List) where other things are hard / impossible to clean up (i.e., old Categories).

It is important to have the mindset that no matter how well organized we think we are at time X we will either find / need a better way to organize ourselves in the future which will not be retroactively applicable (i.e., Categories).

The only solution — not recommended by Quicken — is to start a new file from some point forward which I did once, some 8 years ago. I am "fairly clean" but not "perfectly clean".

This is the nature of the beast (depending on our individual levels of OCD)!

fciani

I have been a longtime user of Quicken as well (sometimes very frustrated). There are things that Quicken does well and some that it does not. I currently have two single-member LLCs, a rental property (now owned by one of the LLCs) and, over the years, several sole proprietorships. I have probably dealt with every issue you are now thinking about. Here’s my thoughts for your consideration.

You will probably here two pieces of advice:1) use totally separate data files for your personal and business data and 2) use one file and you use transfers between the personal and business accounts.

For business solutions where Quicken meets the needs, the former is not practical. We want to see a single picture of our finances and do not want to have multiple reports and kluge them together in some spreadsheet. However, if you examine the issues that you’re trying to resolve through the lens of totally separate data files, the solutions become more readily apparent. The latter advice will give you the correct numbers and reports but will hide some of the data that you should be able to see.

First off, you mention that you just formerly created this business. In that case, I would not worry about previous history. For the purposes of discussion, let’s assume a January 1, 2024, start date. You’ll definitely need business categories. Quicken will not allow the same name to be used for both business and personal so there will need to be a separation method. For me, I reviewed numerous business chart of accounts to come up with a system suitable for me. You might want to research in that area as well.

My category solution was relatively simple:

{P1} Expense (Regular)

{P2} Expense (Other)

{P3} Expense (Work

{P4} Expense (Business)

{B1} Expense (Operating).

{B2} Expense (Non-Operating).

The Income categories follow the same pattern.

Then I have the appropriate sub-categories (fuel, cell phone, utilities, internet, etc.) I also breakdown the personal incoming and expense categories in similar fashion to suit my needs. The numbers are used to get the listing in the reports as I want them. Also, every business transaction will have a Business Tag – I also Include Tags on personal transactions. (Personal, by default).

You also mention that you’re in Canada and the Quicken business tax items don’t align. I wouldn’t worry. Just use the default ‘other business expense’ and other business income’. That will define all the categories as business. If you know the Canadian tax item, you can incorporate that into the business category description. Otherwise, the reports themselves will ultimately dictate the appropriate tax line for entry.

A couple of examples.

I want to fund the business. I write a check from my personal account to the business. I use a personal category (as described above) with the subcategory ‘Business Equity’, and I use a compound Tag (Personal:(Bus1). The Tag is the same as the business tag but encased with (). Through trial and error, this was the best method to get the reports as I wanted them. When I run my personal cash flow report, I see that I made a $1000 equity deposit to the business. Had you simply transferred the funds. You would not be able to categorize the transfer and it would not show up as a personal expense. Perhaps you have multiple LLC members, so you want to track who and the amounts given. On the business side, I would deposit the money into the business checking account with the business category: {B2} Business Income (Non-Operating). Now, when you run the business report, you see that there is an equity deposit in the amount of $1000. It's in the non-operating category versus the Operating category where the actual income from sales and services would be recorded.

If I use personal money to make a business purchase (try to limit, but it is not always possible), I use, as an example, the {P4} Expense (Business):Computer with Personal (Bus 1). When I do a personal cash flow report by tag, I easily see that I have an expense that the business needs to reimburse me for. I can then write a check from the business account with the appropriate business category. Then, the personal cash flow report will show a net zero for personal money spent on business and the business report will show the proper amount and category for the expense. You do NOT want to incorporate personal accounts into business reports. That will create a mess.

You also mention Net Worth. That entails another simple adjustment. Again, thinking as two separate data files helps with the solution. When I made the initial equity deposit from my personal account, I also created a Personal Business Asset account and set the amount to the equity deposit ($1000). I expect the equity to be returned one day, and if there are multiple owners, this account makes it easy to determine my % of the business. To keep the Net Worth balance correct, I also create a Business liability account and set the balance to $1000. Now, when I do a Net Worth statement, the equity accounts net to zero as they should. Had you simply used account transfers, much of this data would be hidden.

The other thing I do, is to use sub accounts. Quicken doesn’t support this, but this is a work around. I have used the same checking and credit accounts for multiple businesses. Since everything has a tag, keeping the data separate is easy. However, what is not easy is keeping the various account balances separate. If you use the same account for multiple businesses/personal data entries, simply break it up into the necessary pieces (quicken won't know the difference). For example, if you use a primarily personal checking account for business simply create a new business checking account. Checking Account A (Personal) and Checking Account A (Business). Anything business related goes into the business side. Anything person goes on the personal side. What you lose is the ability to directly reconcile the account. However, you can create a report with both pieces with the end date of the statement. One you balance out the account, you manually set the transactions to reconciled. The other thing required is to remove the business funds from the personal side and place them in the business side. Again, there is no need to add a personal account to the business report.

Lastly, you don’t mention what type of business. If this is a cash business, you may not need to use the A/P and A/R accounts. This adds another layer of complexity that may or may not be necessary.

This may be a lot of info, but it has taken much trial and error to come to solutions that fit my needs. This may help get you where you need to be faster.

Good luck.

JoelC

@fciani , appreciate you taking the time to respond noting:

I have been a longtime user of Quicken as well (sometimes very frustrated). There are things that Quicken does well and some that it does not.

Agreed, I have had the same experience.

You will probably here two pieces of advice:1) use totally separate data files for your personal and business data and 2) use one file and you use transfers between the personal and business accounts.

For business solutions where Quicken meets the needs, the former is not practical. We want to see a single picture of our finances and do not want to have multiple reports and kluge them together in some spreadsheet. However, if you examine the issues that you’re trying to resolve through the lens of totally separate data files, the solutions become more readily apparent. The latter advice will give you the correct numbers and reports but will hide some of the data that you should be able to see.

Agreed, I have opted to use one file and use transfers between business accounts and personal accounts. I believes the approach is the better of the two but time will tell!

I have spent considerable time devising solutions / workarounds to my reporting needs. It remains to be seen whether the solutions / workarounds can be improved and/or whether they work! I will use 2024 as my test year and will keep open the option of changing for 2025. The goal is to find THE BEST OVERALL approach, not one approach will be perfect!

First off, you mention that you just formerly created this business. In that case, I would not worry about previous history. For the purposes of discussion, let’s assume a January 1, 2024, start date. You’ll definitely need business categories. Quicken will not allow the same name to be used for both business and personal so there will need to be a separation method. For me, I reviewed numerous business chart of accounts to come up with a system suitable for me. You might want to research in that area as well.
Then I have the appropriate sub-categories (fuel, cell phone, utilities, internet, etc.) I also breakdown the personal incoming and expense categories in similar fashion to suit my needs. The numbers are used to get the listing in the reports as I want them. Also, every business transaction will have a Business Tag – I also Include Tags on personal transactions. (Personal, by default).

I started one business in 2017 and the other in 2023 but did not use Quicken's business capabilities (i.e., there was no separation between business reporting and personal reporting) . I am not concerned / worried about previous history as I do not want teh past to handcuff in the future. The past recording / reporting will remain as it is!

With i) having developed a lean and robust category structure for previous years reporting and ii) Quicken not allowing teh sam name to be used for both business categories and personal categories I have created categories Business Expenses and Business Income and essentially replicated the previous created personal categories thereunder.

With this approach the biggest con is that business categories are nested which limits the use of the Quicken widget views for business purposes because everything appears under Business Expense or Business Income (i.e., there is no further breakdown) which is not a significant issue as the reports allow further granularity. The biggest pros of this approach are i) the category naming convention is lean, familiar and robust and ii) the business categories can be easily identified / separated for reporting purposes!

You also mention that you’re in Canada and the Quicken business tax items don’t align. I wouldn’t worry. Just use the default ‘other business expense’ and other business income’. That will define all the categories as business. If you know the Canadian tax item, you can incorporate that into the business category description. Otherwise, the reports themselves will ultimately dictate the appropriate tax line for entry.

I will be clearer here. Quicken Canada does have Canadian specific tax items. The lack of alignment comes from the tax items excluding the type of business / return I file (i.e., in Canada, teh type of business dictates the number / type of returned filed)!

The solution / workaround for this is to select the Canadian specific tax items that most closely align with my business. This is fine as I am using Quicken for business accounting / reporting / tracking purposes (i.e., not for tax purposes, this will be done outside of Quicken)!

I want to fund the business. I write a check from my personal account to the business. I use a personal category (as described above) with the subcategory ‘Business Equity’, and I use a compound Tag (Personal:(Bus1). The Tag is the same as the business tag but encased with (). Through trial and error, this was the best method to get the reports as I wanted them. When I run my personal cash flow report, I see that I made a $1000 equity deposit to the business. Had you simply transferred the funds. You would not be able to categorize the transfer and it would not show up as a personal expense. Perhaps you have multiple LLC members, so you want to track who and the amounts given. On the business side, I would deposit the money into the business checking account with the business category: {B2} Business Income (Non-Operating). Now, when you run the business report, you see that there is an equity deposit in the amount of $1000. It's in the non-operating category versus the Operating category where the actual income from sales and services would be recorded.
If I use personal money to make a business purchase (try to limit, but it is not always possible), I use, as an example, the {P4} Expense (Business):Computer with Personal (Bus 1). When I do a personal cash flow report by tag, I easily see that I have an expense that the business needs to reimburse me for. I can then write a check from the business account with the appropriate business category. Then, the personal cash flow report will show a net zero for personal money spent on business and the business report will show the proper amount and category for the expense. You do NOT want to incorporate personal accounts into business reports. That will create a mess.

Agreed as are the type of challenges I am addressing. I have a similar approach though i) I am trying to limit the use of tags (i.e., there is balance between recording simplicity on one side vs report robustness / requirements on the other side). I hope I have it right from the start but recognize that I will likely need to refine during the year.

Agrees that including business accounts / personal accounts in personal reports / business reports will be a disaster!

Good / interesting to note that you too have adopted the 1 file for business accounts and personal account as well!

You also mention Net Worth. That entails another simple adjustment. Again, thinking as two separate data files helps with the solution. When I made the initial equity deposit from my personal account, I also created a Personal Business Asset account and set the amount to the equity deposit ($1000). I expect the equity to be returned one day, and if there are multiple owners, this account makes it easy to determine my % of the business. To keep the Net Worth balance correct, I also create a Business liability account and set the balance to $1000. Now, when I do a Net Worth statement, the equity accounts net to zero as they should. Had you simply used account transfers, much of this data would be hidden.

Agreed noting I have done something very similar to this. I have even one to the extent of tracking the taxes that will be owned when the corporate funds are paid our to me personally to track my after tax net worth! We are aligned!

The other thing I do, is to use sub accounts. Quicken doesn’t support this, but this is a work around. I have used the same checking and credit accounts for multiple businesses. Since everything has a tag, keeping the data separate is easy. However, what is not easy is keeping the various account balances separate. If you use the same account for multiple businesses/personal data entries, simply break it up into the necessary pieces (quicken won't know the difference). For example, if you use a primarily personal checking account for business simply create a new business checking account. Checking Account A (Personal) and Checking Account A (Business). Anything business related goes into the business side. Anything person goes on the personal side. What you lose is the ability to directly reconcile the account. However, you can create a report with both pieces with the end date of the statement. One you balance out the account, you manually set the transactions to reconciled. The other thing required is to remove the business funds from the personal side and place them in the business side. Again, there is no need to add a personal account to the business report.

Agreed noting this is what I have done for / with my two credit cards as I do not want to carry around 4 credit cards. The reconciliation / reporting is easy to do based on the sub-account (i.e., one business credit account for card 1, one personal credit card account for card 1) and the tags that I have used.

*****

I thank you for taking the time to share so much information with me.

It is interesting that we have independently developed very similar approaches to identical / similar problems. With you being farther down the road in your journey I may / will likely come back to you with specific items / problems for which I do not see an immediate solution, I hope that is okay.

Thank you for sharing, it was very helpful and insightful!