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Business Reports: P/L Report, Why Do Transfers Not Appear

JoelC

I am working on tweaking my Business reports.

I ran a Business P/L report and noticed that the transfers do not appear even though I have the report properly configured to include transfers (i.e., I have selected the account to which funds are transferred as a category, I have selected include all transfers, etc.).

I understand that intra-company transfers should not be included as this is nothing more than moving around within the same entity.

That said, I do not understand why out-of-company transfers are not included as these represent costs to the company. The specific situation I am working is transferring funds from my company to myself personally (i.e., paying myself) (note: I use one Quicken file for personal and business financial tracking meaning my pay is categorized as a transfer).

There is no reason that I can think of as to why such a transfer would not be included in the P/L, it is a real cost to the business.

Would appreciated any and assistance in:

i) getting the transfers to appear; and/or

ii) recording the payment of my salary in a manner that appears in the P/L.

Thank you.

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NotACPA

Transfers are neither Income (Profit) nor Expense (loss). Why would you expect them to appear?

Are these transfers to an account that's NOT in the Q data file? If so, they're not transfers, which are only within the same file.

JoelC

@NotACPA appreciate the response and fair enough, transfers are neither income nor expense.

The question — perhaps the better question- therefore is how do I record a transfer from my company to myself (personally) that represents my salary with the two accounts being in the same Q data file such that it appears in my P/L statement?

While I suppose I could enter the amount separately in each account with the appropriate category (i.e., not use a transfer) but this seems to defeat the purpose.

Would a tag (as I am typing before testing) solve this problem (i.e., would a transfer that has a tag that is to be included in the report) solve the problem or would the entry still be excluded because it is a transfer?

Thank you.

NotACPA

You and the company are the same tax entity, so your "salary" isn't really such. It's merely moving funds from your business pocket to your personal pocket … and isn't an expense and isn't eligible for the P&L.

See if the BUSINESS, Cash Flow report does what you want.

JoelC

@NotACPA appreciated but I will politely disagree with you as my salary is an expense to my company and when I file my tax return I intend and need to report it as such. I am Canadian and unlike in the US, I am a separate legal and tax paying entity from my company (i.e., they are different)!

The cash flow report does show teh transfer amount but is on a cash basis so it is less than ideal!

Thank you.

Jim_Harman

Generally in the US if two people or entities file separate tax returns, Quicken works best if they have separate data files. I suspect that may also be the case in Canada.

JoelC

@Jim_Harman perhaps.

There is a thread that speaks to 1 data file vs 2 data files. I opted for 1 as it was the better balance for me primarily for consolidated reporting, fund transfers etc.

Tom Young

The Canadian version of Quicken may not be able to distinguish between two different taxpayers where the accounting for both takes place in the same file.

The US version is set up for Schedule C reporting under US tax law where the Schedule C is an integral part of a person's Form 1040 "U.S. Individual Income Tax Return" and I'd be surprised in Quicken (the company) did the additional coding needed to make "two taxpayers/one file" work. Certainly the only approach in this situation is to maintain two separate Quicken files where money leaving the business entity can be coded as a cost to the company.

Do you know for certain that the Canadian version does allow for the two taxpayers/one file approach?

NotACPA

Then you should have posted this thread in the Q Canada forum … so that we'd know that you're Canadian. I'll get a Mod to move this thread.

Also, please update your Profile to reflect that you're running Q Canada.

JoelC

@Tom Young , appreciate the response.

The Canadian version of Quicken may not be able to distinguish between two different taxpayers where the accounting for both takes place in the same file.
The US version is set up for Schedule C reporting under US tax law where the Schedule C is an integral part of a person's Form 1040 "U.S. Individual Income Tax Return" and I'd be surprised in Quicken (the company) did the additional coding needed to make "two taxpayers/one file" work. Certainly the only approach in this situation is to maintain two separate Quicken files where money leaving the business entity can be coded as a cost to the company.
Do you know for certain that the Canadian version does allow for the two taxpayers/one file approach?

I do not specifically know whether it allows for two taxpayers / one file approach.

I do however know that it specifically contains BOTH i) personal tax reporting codes AND ii) business tax reporting codes.

JoelC

@ NotACPA

i) I do not think this issue is strictly Canadian but to each there own. Happy either way.

ii) I just now checked my profile and there is no ability to select a Canadian option, at least under the options presented to me.

NotACPA

@JoelC It has already been discussed here how US and CDN tax codes differ in this matter … so it IS a strictly Cdn issue.

ii) click your avatar, then click the funky icon to the left of it. (OR, "Edit Profile Fields" if you have that). The drop down menu will allow you to select the correct Q product.

JoelC

@NotACPA , please note that I am trying to make the change you suggested / proposed but per teh below options presented to me, there is no such option that specifies Canadian.

JoelC

@ All, I have worked around this issue / problem by entering the amount separately in each account with the appropriate category (i.e., not entered as a transfer). This is not ideal but at least it works.

NotACPA

Use the downward triangle, in the upper right of the dialog that you found. Here's the options to me:

JoelC

@NotACPA Ahhh, well don't I feel stupid! Done with thanks!

mshiggins

"There is no reason that I can think of as to why such a transfer would not be included in the P/L, it is a real cost to the business."

Actually, there is a good reason. [A reminder: all my comments are based on the U.S. version of Quicken.]

From one of my other posts here recently:

"[Quicken business reports/graphs intend to use ONLY Quicken "business transactions". In the U.S. Quicken version, a business transaction must satisfy one of two criteria: the transaction must have a Schedule C tax line item assigned, or it must have NO tax line item assigned but have a Business Tag assigned (see Business > Manage Business Information to create Business Tags).]"

That basically explains the underlying Quicken treatment of business transactions. Neither half of your "salary" transfer transaction is a "business transaction"; hence, neither half appear in the Business > Profit & Loss Statement.

The concept the "business transaction" definition implements is this: A QUICKEN "business" is sort of a tax fiction. Its purpose is to allow individuals, adhering to the tax laws, to reduce some of their otherwise taxable income by deducting tax-qualified "business expenses" that could not be deducted from their "personal income". As noted earlier in this discussion; ALL the alleged business income/expenses are, in the end, personal income/expenses: see next paragraph.

At the end of the tax year, a Business Income/Expenses report (in the U.S.: a Schedule C, Profit & Loss report) is filed with the appropriate tax authority. The net income amount in that Schedule C business report is reported on a separate line on the individual's income tax form. That is how Schedule C businesses (the only "business" Quicken is designed to handle) work.

So when you record "business income". then "transfer" some of that business income to your "personal income" and call it a "business expense"; you will either be under-reporting your "personal income" (if you don't report that transferred "income" on your personal tax form filed with the tax authority), or you will simply be reporting the income redundantly (once when it was "earned" by the "business", then again when it was "earned" by you "personally").

As noted earlier, you could (and probably should) keep your business and personal data in separate files. But if you don't do that, you should at least view your issue as if your business and personal data was in different files.

There are a couple of approaches that might work; whether any will pass final muster (with you and your tax authority) is a question I can't answer.

To more closely reflect an employer/employee relationship, you can record the payment of your "salary" to an expense category with the appropriate business expense tax line item assigned; then record your receipt of that "salary" to a personal income category with the appropriate personal income tax line assigned.

If you feel you must record the "salary" payment/receipt as a transfer; you can assign a business expense tax line item to the transfer out of the business account, and a personal income tax line item to the transfer into the personal account.

A third possibility might be (I have not tested this thoroughly): assign a Business Tag AND a business tax line item to the transfer out. Quicken would then normally include the transfer out transaction in both the Business Tax Schedule report and the Business Profit & Loss report by default ... BUT you can exclude the transaction from the Business Tax Schedule report by excluding the Business Tag from the report. This approach assumes you don't use the Business Tag for any transactions you want to appear in the Business Tax Schedule report.

-JP

JoelC

@mshiggins

Agreed and understood. The difference as noted earlier in the thread is that in Canada Joel (the person) and Joel's business are separate tax entities.

There are a couple of approaches that might work; whether any will pass final muster (with you and your tax authority) is a question I can't answer.

To more closely reflect an employer/employee relationship, you can record the payment of your "salary" to an expense category with the appropriate business expense tax line item assigned; then record your receipt of that "salary" to a personal income category with the appropriate personal income tax line assigned.

Appreciated. This is exactly what I did and it works.

f you feel you must record the "salary" payment/receipt as a transfer; you can assign a business expense tax line item to the transfer out of the business account, and a personal income tax line item to the transfer into the personal account.

Can you pleas explain this option because when you record an item as a transfer there is no ability to assign it a Tax Line Item because the category is account? What am I missing?

mshiggins

"The difference as noted earlier in the thread is that in Canada Joel (the person) and Joel's business are separate tax entities."

Remember, my comments are based on the U.S. version of Quicken. And in the U.S. version, there is no meaningful distinction between the individual and the Quicken "business". There are no "arms-length" transactions between the Schedule C business and the Schedule C business "owner".

If you're convinced that Quicken Canada intends to treat you and your business differently than Quicken U.S., then you should probably use Help > Report a Problem to let Quicken know that the Canadian version is not working as designed.

As to assigning a tax line item to an individual register transaction: Any non-investment transaction can have a tax line item assigned directly to the transaction - it is not necessary to accept the tax line item (or lack thereof) from the Category List.

Right-click any non-investment transaction, select "Tax line item assignments", and choose the appropriate tax line item in the resulting dialog.

-JP

JoelC

If you're convinced that Quicken Canada intends to treat you and your business differently than Quicken U.S., then you should probably use Help > Report a Problem to let Quicken know that the Canadian version is not working as designed.

Already done. Thank you!

As to assigning a tax line item to an individual register transaction: Any non-investment transaction can have a tax line item assigned directly to the transaction - it is not necessary to accept the tax line item (or lack thereof) from the Category List.

Right-click any non-investment transaction, select "Tax line item assignments", and choose the appropriate tax line item in the resulting dialog.

Excellen piece of new information (for me). Thank you for sharing.