Categorization of account transfers

James Matt · March 2023

I'm struggling to get some transfers categorized. Below is a quick summary of what I'm trying to do and the issue.

I recently started up a new business. Before receiving my first revenue, I was incurring business expenses through my personal account. The plan was always to reimburse my personal account from my business account once funds were available.

I did that this weekend and wrote several checks from the business account to myself - and deposited the via mobile deposit into my personal checking account.

Both accounts are connecting and updating in Quicken.

The problem is when I attempt to categorize the transactions in Quicken. Upon download, they were tagged as transfers - and I guess they are. However by objective is to categorize them as follows:

Deposit to personal - categorize to the account where the cost was first incurred - essentially offsetting the expense and net to zero on the personal side
Checks written from business account - categorize them to the proper business expense category.

The problem, is that when I change the categorization from being an account transfer to a business expense category - the deposit does not show up in my personal account in quickbooks any more. This leaves the balance in quickbooks out of sync with my bank balance.

I rectified this my changing the categorization back, however I'm hoping there is a way to make the categorization to work as intended.

I could unconnect by business account from quicken to solve this, but I'm hoping for a solution that allows everything to stay connected.

Sorry for the long post.

splasher · March 2023

You reference Quickbooks in your question. Nothing you do in Quicken is going to affect Quickbooks.

If you want to categorize your "transfers", then you have to add a transaction in each account with the appropriate category, but true Quicken transfers come in pairs, one in each account, change the category in one side and the other side is deleted since it isn't a transfer any longer.

Bob_L · March 2023

I suggest this: Instead of doing a transfer think of it like you are presenting a voucher to your business to be repaid for previous expenses(delete the original transfer(s)). That is create a split transaction in business checking for the check to you containing all of the previous expenses categorized correctly and noted as reimbursements. You should probably create something like a voucher and attach it to your transaction for record keeping purposes. Then create an equal deposit transaction in your personal account offsetting those previous expenditures. Does this work for what you want?

edit: probably even better to set up an asset account "clearing account-business" with the original expenditures categorized to it, and later offset by the deposit of the reimbursement check.

Not an accountant, so perhaps others will stop by to see if this is best way or not.

Categorization of account transfers

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