Business and Personal Tracking: One Quicken File or Two Quicken Files
I am currently using 1 Quicken file to track both business finances and personal finances.
I though that this was preferable over using 2 Quicken files (i.e., 1 for business finances and 1 for personal finances) for a number of reasons including:
i) better tracking of transfers between business accounts and personal accounts
ii) combined net worth statement
iii) combined measurement and view of investments
iv) easier maintenance only need to clean up one file
v) no need to switch between files
In digging into Quicken I found some limitations that are getting me to rethink this decision with the primary drivers being the business reporting is complicated by (what appears to be) the automatic application of taxes and the nested nature of the business expense / income sub-categories under Business Expenses / Business Income categories.
With this in mind I am very interested in views on teh following:
i) Preference for 1 Quicken or 2 Quicken Files?
ii) What is the best way to split a Quicken file into 2 Quicken files (if there even is a good way)? I am guessing that there is no good way and the only solution being to start both from scratch.
iii) Would you go through the effort of moving from 1 Quicken file to 2 Quicken files?
Thank you.
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One of the things that is stressed over and over on this forum is each tax identity should be a separate file.
And as for splitting data files, as far as I know there isn't any easy way, but even more to the point, make sure you don't just do a Windows copy of the data file. Use Quicken's copy otherwise you will have two data files pointing at the same Quicken Cloud dataset. Not a good thing!
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Appreciated.
I will need to think through what I want to do.
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@Chris_QPW quick follow up.
If I use Quickens copy to copy the file and then delete all business / personal accounts to have a personal / business file what’s happens to all the transfers (i.e., if I delete the personal accounts will I lose data in the business accounts)?
If this is the case then given we are only 7 days into a new year, it may more sense to simple start two new files?
Comments or thoughts?
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When you delete an account that has a transfer to another account that still exists Quicken changes the "category" to [Unspecified Account].
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Hmmmm, so it may not be awful setting up separate accounts!
Comments / thoughts / suggestions as you can never go back on:
i) starting from scratch as we are at the start of a new year ; OR
ii) creating two copies and deleting all the personal accounts in one and all the budiness accounts in another.
Worth noting, I don’t care about historic reporting as I will have that in the current file.
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One of the things that is stressed over and over on this forum is each tax identity should be a separate file.
Apologies, I should have asked earlier, why?
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Note, I'm not the one that stressed this, other SuperUsers that have dealt with more business situations are the ones that recommended this. I assume for the very same reasons you are questioning it right now. For me, I only had a "Schedule C" business where the personal and business is intermixed for tax purposes, so that is the main reason that it is "Home & Business" instead of a separate Business edition only. For the "tax identities" that do mix the two.
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Note, I'm not the one that stressed this, other SuperUsers that have dealt with more business situations are the ones that recommended this. I assume for the very same reasons you are questioning it right now.
I would appreciate having a SuperUser who recommends a separate Quicken file for each tax entity jump in and explain the rationale for this recommendation.
Quicken Usage
I am not interested in Quicken's tax determining / filing capabilities. I am solely interested in Quicken's recording / tracking capabilities (i.e., I use a third party for taxes). Question, does this change the recommendation for a separate Quicken file for each tax entity?
Quicken Challenges / Legacy / New Files
In my view, the challenges that I am encountering are more legacy related from having +/- 30 years of data in one Quicken file. The two major ones being:
i) the number of accounts and categories that have accumulated (despite best efforts to keep these clean and consistent) make creating / tweaking reports far more difficult but once configured and saved, the reports work;
ii) tweaks to the workflow as companies have come and gone during my working life, as my recording practices have evolved, as Quicken has evolved, etc. all of which have created inconsistencies between the years.
It is my view that these challenges speak more to the need to start new Quicken files (i.e., to remove the complexities created by +/- 30 years of data) than to the need to have separate Quicken files for each tax entity. There are other users who use one Quicken file for multiple tax reporting entities for teh very reasons listed earlier in this thread (i.e., see @fciani post in the thread titled "Quicken for Business Setup").
That said, were I to start new Quicken files I would likely start one for each tax reporting entity to avoid / slow the "legacy growth challenges" that I am now facing. These challenges can be overwhelming.
Quicken Challenge Not File Related
The one major challenge that remains — there are workarounds for all / most of the others - is listed in this thread
The important / key point to note is that this problem is not related to whether there is one Quicken file with multiple tax entities or one Quicken file for each tax entity (i.e., this problem cannot be solved by creating multiple files). The problem is (or appears to be) with Quicken's P/L and there being no ability to not have taxes applied to the income.
Would GREATLY appreciate a solution to this problem (i.e., other than downloading the report into Excel and backing out the taxes)!
*****
All comments / thoughts / solutions encouraged and welcomed.
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I don't have a definitive answer to your question; just a couple of observations.
I believe that Quicken is capable of maintaining both personal and business data in the same file while giving the user largely accurate insights into both.
[See footnote below for a way to make having both data types in the same file an even more useful option.]
But, as you have already experienced, there are certain limitations (some of which are not immediately obvious) to having personal data mixed with business data in the same file.
The primary problem that I see is the (necessary) distinction between personal and business transactions; a distinction, which when not honored, can create significant confusion/inaccuracies in certain situations. And that "distinction" problem exists largely because Quicken has not fully addressed all the situations where personal and business transactions have to be accurately identified and, where appropriate, kept separate (*).
As noted elsewhere, all Quicken business features "should" utilize only "business transactions". Conversely, all Quicken personal features should utilize only "personal transactions".
Quicken does not currently have the capability to make that distinction everywhere it is called for.
I believe that keeping personal transactions (and only personal transactions) in one file. and business transactions (and only business transactions) in a separate file; should overcome most of Quicken's inconsistent distinction between the two types of transactions.
One example I believe you have already encountered is certain Quicken Home Tab widgets that don't distinguish between personal and business transactions: improperly mixing the two transactions types is confusing at best, and just plain wrong at worst.
If all the transactions in a given Quicken file were of the same type (business or personal), such distinction problems should largely disappear. A widget, for example, that currently does not distinguish between personal and business transactions, should nevertheless, produce accurate results if the only transactions available to it are either personal or business.
[ (*) I may have posted this before: I believe Quicken could allow more accurate results for users who really, really want to have both personal and business transactions in the same file, by having a Customize option for every report/graph/widget/card that allowed the user to specify the transaction type(s) allowed for each report/graph/widget/card:
- Transactions of any type
- Only personal transactions
- Only business transactions
- Only rental property transactions]
[Quicken's transaction type definitions:
- Business transaction: any transaction with a Schedule C tax line item assigned, OR any transaction with NO tax line item assigned but a Business Tag assigned
- Rental Property transaction: any transaction with a Schedule E tax line item assigned, OR any transaction with NO tax line item assigned but a Rental Property Tag assigned
- Personal transaction: any transaction that is not a Business transaction or a Rental Property transaction]-JP
Quicken user since Q1999. Currently using QW2017.
Questions? Check out the Quicken Windows FAQ list0 -
@mshiggins , as always, thank you for taking the time to post a detailed response, it is greatly appreciated.
I believe that Quicken is capable of maintaining both personal and business data in the same file while giving the user largely accurate insights into both. [See footnote below for a way to make having both data types in the same file an even more useful option.]
Good to know.
The primary problem that I see is the (necessary) distinction between personal and business transactions; a distinction, which when not honored, can create significant confusion/inaccuracies in certain situations. And that "distinction" problem exists largely because Quicken has not fully addressed all the situations where personal and business transactions have to be accurately identified and, where appropriate, kept separate (*).
I believe that I have addressed this in that all business transactions have i) business categories assigned to them and ii) business tags.
I believe that keeping personal transactions (and only personal transactions) in one file. and business transactions (and only business transactions) in a separate file; should overcome most of Quicken's inconsistent distinction between the two types of transactions.
I concur but this driven by poor design / execution. It is sledge hammer approach whereas I would prefer a surgical approach.
One example I believe you have already encountered is certain Quicken Home Tab widgets that don't distinguish between personal and business transactions: improperly mixing the two transactions types is confusing at best, and just plain wrong at worst.
[ (*) I may have posted this before: I believe Quicken could allow more accurate results for users who really, really want to have both personal and business transactions in the same file, by having a Customize option for every report/graph/widget/card that allowed the user to specify the transaction type(s) allowed for each report/graph/widget/card:
- Transactions of any type
- Only personal transactions
- Only business transactions
- Only rental property transactions]
[Quicken's transaction type definitions:
- Business transaction: any transaction with a Schedule C tax line item assigned, OR any transaction with NO tax line item assigned but a Business Tag assigned
- Rental Property transaction: any transaction with a Schedule E tax line item assigned, OR any transaction with NO tax line item assigned but a Rental Property Tag assigned
- Personal transaction: any transaction that is not a Business transaction or a Rental Property transaction]Yes, yes, yes!
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I take your response to mean that Quicken can have both Personal Transactions and Business Transactions in the same file but thee are challenges / limitations (as noted above) whereas having separate files for Personal Transactions and Business Transactions has its own limitations (also as noted above). The challenges are driven by Quicken not having sufficient customization options. There is no correct answer, both approaches have challenges and limitations.
Please correct / confirm my understanding.
Thank you.
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@JoelC one small contribution to this discussion… You are clearly discussing a (Canadian) situation where the person and the business (I assume sole proprietorship or corporation) are different tax entities. There is another situation where a Canadian person has professional income (e.g. dentist). In my case, where I have salary income and my wife has professional income, but in totality this is one tax entity, it has worked fine to have everything in one Q file.
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@Arctic Hare appreciate the comment.
It depends how one is structured.
If one is an employee and/or practices as a professional without a corporation/ professional corporation / other then yes, one tax entity.
If, on the other hand, one is an employee (as I am of my company) and has a company (as I do) / professional corporation / other then two tax entities.
In terms of one Quickn file versus multiple Quicken files I think it is sic of one, half a dozen of another. I flip flop on a daily basis depending on what does / does not work. If I can get one last issue solved I will stick with one Quicken file for this year and revisit during the year.
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Exactly, I was referring to unincorporated professional. As soon as there is a corporation involved there is separation between entities.
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"I take your response to mean that Quicken can have both Personal Transactions and Business Transactions in the same file but thee are challenges / limitations (as noted above) whereas having separate files for Personal Transactions and Business Transactions has its own limitations (also as noted above). The challenges are driven by Quicken not having sufficient customization options. There is no correct answer, both approaches have challenges and limitations.
Please correct / confirm my understanding."
Basically, yes: that was my point.
And based on your comments so far in the Community, I suspect that separate Quicken files are your best bet.
One big reason: I don't believe you can overcome significant problems with the business/personal transaction distinction, if you use one Quicken file for both personal and business and expect to have investment accounts treated accurately as "business accounts".-JP
Quicken user since Q1999. Currently using QW2017.
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@mshiggins , appreciate you taking the time to respond noting:
And based on your comments so far in the Community, I suspect that separate Quicken files are your best bet.
One big reason: I don't believe you can overcome significant problems with the business/personal transaction distinction, if you use one Quicken file for both personal and business and expect to have investment accounts treated accurately as "business accounts".
As I have
i) spent a significant amount of time configuring / tweaking the 1 Quicken file approach over the Christmas / New Year break
ii) spent very little time using the configured / tweaked 1 Quicken file approach to know whether it does / does not work (i.e., it is only January 9th)
iii) the 1 Quicken file very close to where I think it needs to be
iv) would like to avoid unnecessary work; and
v) very little free time to split the 1 Quicken file into 2 Quicken files
I will stick with the 1 Quicken file approach for 2024 and re-evaluate during 2024 Q4 which will leave me lots of time to split the file into 2 for 2025 should I wish (i.e., I think i only makes sense to split the file at the start of a new tax year).This approach will give me deep insight into the pros and cons of the 1 Quicken file approach.
The one thing I want to avoid above all else is the work involved in 1 Quicken file → 2 Quicken files → 1 Quicken file meaning I need to be very certain about the need to make the move. The configuration / tweaking involved is very time consuming.
Worth noting, there are likely a number of pros and cons of the 2 Quicken file approach which I will only discover should I try that route as well.
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I think I will throw this out. When I started with Quicken and TurboTax a naïvely bought into the idea that Quicken would be "correct" and that the transfer of information to TurboTax would save me time.
The first eye opener was the transfer of data to TurboTax, and just some simple interest in my savings accounts. Trying to get that to transfer correctly I spent hours on something I could have typed in, in seconds.
The second part was when I realized that there were situations that Quicken just plain doesn't know about. Using the tax planner to predict my taxes is based on the scheduled reminders like paychecks. All well, in good if your paychecks are exactly the same for the whole year, which was seldom the case. And other things like right now I have a security that "pays dividends", and it even shows up like that at Chase, and is downloaded that way. But in reality, a good part of that is actually "return of capital", and I won't know the exact split until the 1099 is actual sent out.
This is a long-winded way to say that I use Quicken as a "record keeper", "report generator", "double checker", but I use my tax program as the "predictor", and I don't "trust" I confirm all the numbers that Quicken throws at me.
I believe that you are correct, putting your finances in two data files will clear up some problems, but might cause others, but even more than that, might cause more work than it is worth. I have long since given up any kind of direct transfer of data from Quicken to TurboTax (or whatever tax program I was using at the time).
It just wasn't worth the time wasted, especially once TurboTax could draw a lot of that data directly from the official source.
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@Chris_QPW appreciate the added commentary noting:
This is a long-winded way to say that I use Quicken as a "record keeper", "report generator", "double checker", but I use my tax program as the "predictor", and I don't "trust" I confirm all the numbers that Quicken throws at me.
I am in complete agreement and could not agree more. The efforts of the last month have been to make the record keeping, report generator and double checker (this is spot on to how I use Quicken) as accurate, informative and flexible as I may need as well as to tie transactions to the correct accounting period.
I believe that you are correct, putting your finances in two data files will clear up some problems, but might cause others, but even more than that, might cause more work than it is worth. I have long since given up any kind of direct transfer of data from Quicken to TurboTax (or whatever tax program I was using at the time).
I am in complete agreement again which is why I have decided to take a wait and see approach. I will know more in a few months time after living with the current tweaks I have made (and they are substantial).
It just wasn't worth the time wasted, especially once TurboTax could draw a lot of that data directly from the official source.
Agreed which is why I am hesitant to make the change. I think, but have no proof, that were I to move to 2 Quicken files I would discover a slew of different challenges / problems. That said, there are a number of areas that I would like to see Quicken improved.
Thanks!
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