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Here we are in our QuickBooks Online test company file using the account view as opposed to the business view you can toggle between the two views by going to the cog up top and switching the view down below duplicating some tabs to put reports in like we do every time right click in the tab up top to do so and duplicate right click in the tab to do so and duplicate again back to the tab to the middle the reports on the left we want this time the balance sheet report and then tap into the right reports on the left then the profit and loss the income statement. Going to close the hamburger we're going to change the range from a one oh one two three tap twelve three one two three tab and run it and then tab to the left closing up the hamburger and change that range to the same oh one oh one two three tap twelve three one two three tab and run it that's the setup process we do every time I'm going to tab over to the income statement last time we talked about the home office deductions breaking out between the amount that's deductible because they're business deductions versus personal and we looked at an adjusting entry method which is quite nice because it gives you all the information in one area and it gives you like a worksheet that you can use and you can do that method periodically at the end of the month or the year possibly after you actually do the tax return so you have a worksheet tying out to what the difference is on the tax return and on the books the way we did that is we turned in the class tracking and we looked at the classes this way on the income statement so that we can see our adjusting entry so we set up our accounts under the home office parent account we put everything that might need to be broken out using a ratio which is the typical method under the home office and then we did our adjusting entry allowing us to have the total here which might be necessary these totals might be necessary for tax preparation and then we also can see the breakout which is the business side versus the personal giving us this nice reconciliation which could be useful for taxes now we could do a similar method and we have our same grouping of accounts but as the expenses go through our bank feeds if we already know the ratio that we think is going to be used we can basically automate this as we go and possibly use the class tracking i'm sorry the the bank feed rules in the banking area here and then we've got the items that are going to go through the checking and we can use our rules and our classes to be breaking out between the business and professional so in order to see that i'm actually going to mock up the bank feed so i'm going to make an excel worksheet and imagine that these expenses are going to be imported like a bank feed connection into our bank feed so that we can make rules with this information so i'm just going to open up excel and jot down some transactions here so all we need to pull this into quickbooks is to say that we're going to have a date field we're going to have an amount and a description description description there should be a d there right let me check it on the spell check boom yeah it has an e in it and a couple other changes to idiot whatever whatever dude spelling is not important home tab we're going to go to the short date and let's make the header boldened and we'll make this in 2023 this time so i'll go from 01 15 uh two three 01 dash 15 dash two let's do it in two four so we have a different year that we can work with and let's say the amount was uh let's say uh 240 and let's say this is the utility company that we had uh you the let's say the gas company and then we had on two 15 to four 230 for the gas company and then we had on one 15 let's make it 16 to four we had the 2000 2000 for the landlord landlord and then on to 16 to four we had another 2000 to the landlord and then if we owned our property we would be paying not the landlord but we would have say uh the the payment to the bank so let's say on one 17 to four we paid the bank let's say uh 1000 or let's say we paid them 2300 to the bank and then on to 17 we paid the bank 2300 to the bank and then maybe we had electric to to zero so this is the let's say in one 18 to four we had uh we had the 310 or let's try high 190 to the electric company and then on 218 to four we had 183 to the electric company now this one should also be 24 and then I should have put them all in as negatives so I've gone back in and I've just added an at a negative sign into each of these items then we're going to save it not as an excel file but as a csv file which is easy to do we could just go to the file up top save as browse it I'm just going to put it into the this folder because this is and I'm going to call it bank feed office I'm going to call it number three so I know where it's at but the key thing is I'm changing it from an excel file to a csv file with this drop down the csv file is uploadable the excel file is not it's an easy change to make though and then we have it so if I go on to uh QuickBooks now we're in once again the banking and then in the banking side we're not going to link to the bank but rather hit the drop down and upload from a file if you don't have a checking account or something set up you can add them as you do the upload then I'm just going to add the bank feed here and I'm going to pick this one is the one I want I believe continue select the account if you don't have one you can set one up I'm just going to pull it into the checking account in my practice problem and it has a header row only one column instead of two and the date format is M M D D Y Y Y Y date lined up to date on the columns description lined up to description amount lined to amount looks movie B to the N B N to me so I'm then going to select all of the transactions which they're all negative outflows looks good let's continue and QuickBooks has pulled in eight transactions okay that is good that's what we want to see so if we saw these then pull through to the bank feeds here we might sort them for example by the description and we might try to set up rules as we go so let's start off with the landlord down here and say okay if I was normally entering this through the bank feeds and I typed in landlord I possibly would see in the memo that I paid the landlord if it was an electronic transfer and I could copy that and put it up here but I spelled it wrong in the memo so it should be landlord the lord of the land you spelled the lord of the land's name wrong off with your head just kidding any case we're going to say this was for the rent rent that's under the subcategory and of home office and note however that and I have my class fields over here now the classes we turned on in a prior presentation just to recap what that looks like it's in the cogs tab up top accounting and taxes on the left we're in the advanced stuff over here and then we're in the categories so I've turned on the class tracking I'm not going to warn every time I enter if I don't add a class because I'm only adding classes to some items and we're using the default here so I'm going to save that and done so boom so that means our class field is now being populated so that looks good but what I need to do is be able to allocate this item to multiple classes I need to be breaking out to multiple classes which means I need multiple line items so if I was just doing the data input I can do that with the split field down here and so now I've paying the landlord and I can say that we have the home office and I can choose a class and I have my tax adjusting class if you don't have one you can add one this is this is going to be the adjustment one and basically in our case it's going to be the personal part of the expense so if I was to pull up a calculator and say we're going to say according to our ratio we think 30 percent is business versus personal so if this was a two thousand dollar bill the 30 percent would be business versus the personal so I could say I want the amount to be here which is going to be this is the the personal side let's see this one home office and this is for the rent and this would be the the non-tax adjust class and this would be the 600 versus the 1000 the 1400 and that would give us that nice breakout however I I don't want to have to do that every time I'd like to make a rule to be able to do this so let's say let's say I'm going to close this and instead of doing that I'm going to create a rule down here and try to automate this and see if I can use a percentage rule so I'm going to call this the land the landlord rule let's see if I could spell it right the money out rule and and we're going to say in the description I like to use the bank text most of the time and if you see in the bank text this unproperly spelled landlord right there then you apply the rule so the rule is now being applied to two transactions and we want you to be a transaction type is an expense the category is correct and then we need to add a split though so I can try to allocate to two different classes so I'm going to add a split now and I can split this is where it's kind of cool because I can split based on the percent or dollar amount so I don't want to have to recalculate the dollar amount like we did before I could split it by percent and I can just say that I want the percent that's going to this one is going to be the 30 percent 30 percent home office and that one uh isn't going to have a class and then on this one we want the 60 percent going to the rent for the home office and this one does have a class which we're going to say is the tax adjustment class so now I can kind of do it automatically as I go hopefully we can auto add those if we want or I can kind of test them out make sure that it's applying to the ones we want let's do that I'm going to save it and something's not quite right that only adds to 90 percent okay this needs to be 70 okay let's try it again let's save it let's save it and then we've got the split so now it looks like it's applying what we want to do if I go in here it's got our rule applied let's go ahead and add it and then check it out add it and check it out I'm going to go to my report and run it and then say okay k posso down oh I'm in 2024 now so let's change this to 010124 to 123124 and run it and so now you've got this this nice breakout so once again I said 30 percent if I can get my percents right uh let's see four thousand total for the two thousands for each month times uh point three is what's going to be pulled in here and then the other side minus four thousand is the 2008 which is going to be assigned to the personal or four thousand times point seven got assigned to the tax adjustment so this gives us we can kind of do the data input and get this nice breakout as we go this way so that we can see kind of the business numbers and the total numbers and it gives us the total here which still might be useful so that we can give the accountant the total number because they may need that number to to still break out even though we're giving them the you know the the 30 percent breakout of the business portion so this should allow us to kind of track it as we go on a perpetual method possibly giving us more more numbers for better internal decision making while still giving us the total so that we can give that to the tax preparer and allow us that tying out kind of process so that we can see you know this number then the tax adjustment and and the tax adjusted number so if I was to just do the same concept for the rest of them it would be the same kind of idea so if I went into the electric item here we can say it's the electric and I'm going to make a rule for it let's create a rule and I'm going to copy the description what was in the description electric company rule it's a money out rule I usually use the bank text and electric if it's in there the rule is now being applied to two transactions but I have to use the split thing here and it's going to be a percentage split and I'm going to say that we're going to have a percent that's going to be 30 percent home office that doesn't have a class and then uh 70 percent on the home office this is the home office for the what am I doing the utilities right yes utilities that does have a class this is utilities util utilities okay utilities why is it being difficult utilities okay and this doesn't have a class of the tax adjusting okay hopefully I did that right boom it picks up those two so I can just add them and they should just add automatically going forward or they'll allow me to review it I could have them add automatically I'm going to go to the tab to the right and then run it and so now we've got our utilities breaking out once again kind of as we go let's pull out the trusty calculator if I may and just double check that I've got things going the right way so the total here for the utilities 372 for the two months times point three is the 11 160 and the 372 times point seven is the personal for the adjustment side okay one more or a couple more time if I do the gas it's similar kind of thing here so we'll do this fairly quick we can create a rule we can say that it's going to be the gas company rule this is the gas rule and then description bank text gas two are applied split it percent 30 percent gas not the automobile though you've got to have your proper types of gas this is the other gas this is six this is 70 and this is going to be also the gas under the home office gas home office or put under utilities right yeah and then this one is going to go to the tax adjustment all right saving that and we can add this one and add this one and then if I scroll up we should have that one didn't pull in properly where did it go k-pas k-pas oh it went into the utilities it's in the utilities that's good okay so then if I go back on over just note the bank one I don't want to go into details on the bank one but it adds another level of complexity with the bank feeds which doesn't just have this breakout thing but it also has the fact that we're paying principal and interest so the problem with these ones is that even though I'm paying 2300 and 2300 same dollar amount it's only the amount that's going to be the expense the interest as opposed to the principal that we can then uh breakout between business and uh personal and the the the amount that's going to interest will differ with every payment so when we're trying to automate the system for the bank payments there's an added level of complexity to try to just have the bank feeds automatically pull in which doesn't have to do with this percent allocation it has to do with the fact that the allocation between principal and interest will differ every time and there's a couple different ways you could deal with that like you could do a you could try to automate your bank feeds so everything goes into like the loan account decreasing the loan account and then periodically adjust for the interest portion and then when you do that you can properly allocate between your your business and your personal at that point uh in time uh or you could or you would have to actually manually go in here even though you're in the bank feeds and properly allocate between the business portion and the the uh the the interest the interest in the principal so for example if I went in here and said I can't really do a rule because I have to kind of manually enter the proper interest versus principal so I'd have to go in here and say okay I need to use the splits and I'd go okay now it's going to go to the category of the the principal portion is going to reduce to loan a loan payable account and let's say that that the amount that's going to the loan payable was uh 1500 and then you've got the amount of interest which is the difference of $800 which we can then break out between 800 times 30 percent the business portion which is the 240 so then I'd have interest interest expense which would be uh I'm gonna say the 240 and then the difference let's add line for interest expense on the mortgage is the uh the 560 and then this one would go to the class of the tax adjustment so I can't really again I can't really automate this there it is that works but I can't really automate this as easily because of that because of that breakout between the interest and principal and the following transaction will be different it's not going to be the same breakout between the interest portion the principal portion so that you know as a whole that's a different kind of issue that you could try to do some different methods to work around but we could just you know do that adjustment this way if we wanted to and then if that pulled over now we've got a similar kind of breakout down here and as we go we've got if I just double check that we've got the the total of 800 times the 0.3 which is the business portion and the 800 times 0.7 which is the the personal so that gives me as I do the data input the information I need for taxes which is really the totals so the tax software can then recalculate using a similar method the the business portion and the personal portion and it gives me the correct numbers kind of as we go so I can use that for my internal my internal decision-making to see what my profitability is with because that accurate that isn't a calculation that makes sense between your business and personal for tracking just your business personal stuff and it should also give us that nice reconciliation what we'd like to see so that when I do do my tax returns I have this this uh adjusting entry between the business numbers and the personal numbers so unlike the last method notice I'm not breaking out the adjusting entry like in its own account but rather we're breaking it out basically as we go in in using the these actual accounts basically as we go but we have a similar kind of calculation this would be the amount that includes everything that we paid and then we have the personal part that we took out of it and then we have the amount that should be reflected on the actual tax return so we've had this nice little reconciliation worksheet that could be useful in the event of an audit now you might be saying another method that we could use is to take these amounts and say hey look this portion is really personal it should why would I put it on the income statement I could put it on the balance sheet as basically a draws account and that way and if you use that method you don't even really need class tracking you could put it on the balance sheet the problem with that is we'll take a look at it just to test it out the problem with that is is that you don't have this nice total number that you paid here which you might need for taxes because the tax return is going to have to take these totals and then recalculate using the using the tax software you know using the forms and the tax forms to get to the business portion which should tie out to what we got to if we get if we use the same percent so so if you say I'm just going to tie the other side out to draws because it's personal you could do that but you'd have to make sure that you give the tax preparer the totals which you can get other ways like you can you can print out the information that you put in the draws or you can actually look at the vendors that you paid and print the vendor detail so that they have this number which would be on the income statement and the total amount that you paid to the vendors so that they could put that into the tax form and you just want to make sure that you're clear on what you're doing with that and you might be able to use that method even if you don't have you know class tracking so we might take a look at that in a future presentation