In this presentation, we will discuss the tracking of tax deductions related to charitable contributions within our business account within QuickBooks. Here we are on the homepage, we currently have the open windows open in order to open the open windows, you go to the View, drop down and select the open windows lists. We're not going to go through and enter data into our system for the month of March the third month, we'll do that by going to the bank account, drop out the banking drop down, and then go into use register. And then the checking accounts the one we want, we're going to say OK, we can see that we have entered data for January and February we're doing the process of the bookkeeping on a cash basis method, just taking the bank statement entering that information directly into the check register. Same process, we're going to move going forward here.

Now adding a few more items, those being personal deduction items that we're going to try to track in our business accounts specific purpose. deduction items. So this is an example of our bank statement, we have consciously added things that we're going to pay out of our business checking account that we want to track in our QuickBooks file that are personal in nature, but which we need to track for tax deduction purposes in some area other than our normal business expenses. And we're looking for a way to do that in the same file. This is how we're going to do it with classes. So we're going to enter this information into the system.

We put them in there by checks, but we could any kind of thing that we make a payment as long as we made the payment out of our checking account, whether it be an electronic payment or checks that we wrote, if it's on the checking account, then we're going to go in and apply it to QuickBooks in some way, some format. We're going to do that here by just putting it directly into the check register. So we have all of our normal business expenses, the post office, the post office, this is who we buy our equipment from We sell guitars, we're Epiphone. We sell guitars, Verizon, our telephone company. And then we've added to its these red items, which are going to be the ones that will be specific to this new system. We're setting we're saying, okay, anything that relates to charity, like the Red Cross the American Red Cross and save the children, we're going to put into this item.

And then we're going to break them out in our business account, even though they're not business related, but we're going to put them in a separate class so that we could track them in that same area and put together all our kind of tax stuff together with relation to it in that same area. Books tuition, same thing, not business related shouldn't be on the business income statement. However, we might be able to set up a system like this we're going to set we are going to set up a system like this so that we can track it in terms of classes. And same with possibly childcare might be something we could deduct medical expenses not business related, that we might be able to deduct for other purposes on the tax. tax return, we're consciously changing our habit to pay these out of the business accounts so that we can track them in our business QuickBooks account.

So to do this, we're going to go through and set up these just like we normally would, we're going to go to the post office, set up the post office, the normal one, and then we'll set up our two new ones, which is the American Red Cross and save the children, our charities. So we'll first enter our post office payment into our system. So we're going to go back over here to QuickBooks, and that happened on Oh, 30519, we're working in 2019. So that's March 5 2019. Some of these check numbers will be repeated. So I apologize for that.

But we're going to use the check numbers that are on the bank statement here. So it's going to be 1021. And we're going to say this is going to the post office. We've already written the check to the post office so it will autofill as we type it in there which is nice. The amount is going to be 520 and then the expense account already given Note that it's an expense account. This is just a normal type of transaction.

We don't need to add a class, because this is normal classes, we're just going to add with the exceptions under this method. So we're going to say, all right, that's normal. nothing new there, except the check number has been used before. And that's okay. We're okay with that. So that's the last check that was messed up.

And we're not going to, we're going to be okay with it. It's all right. And then the next one, we've got the pizza place. Now this is to give an example that we could it happens often, where a business doesn't fully separate their business and personal accounts, and sometimes they pay something that's personal out of the business account. That's okay. We just want to make sure that we put it to the right place.

This is not deductible. So we're going to say this is a pizza place, not meals and entertainment, not business related. They took, you know, as a soccer game, they took their kids there after whatever, it's not business related, and it's not deductible for taxes. So we're just going to say that's a draw, that's a draw and we're going to Record just as a draw, that's what we would normally do if something was paid out of the business account. That's not business related. And it's not, it's not our new thing, which is we're trying to track deductible items the tax preparer doesn't care about that doesn't help, most likely in the situation.

You might ask him, but he doesn't, I don't think that's going to be deductible. So, pizza place, we're going to put that in here. And we're going to say five, three ads on 1022. Pizza Place, generic name, probably has a name other than pizza place. But that's okay, quick add setting up the new vendor for the pizza place. And it's going to be a vendor and we paid the pizza place $98 and we're going to make this go to not an expense, but two draws and that's just an example.

That's what we always do. If we paid something out of our business checking account, that's personal. We're not we don't need a class for it's not it's just a normal type of thing that happens. And we're just going to make it go to draws would have been better if we were to draw the money out and then paid for. But that's okay. We're going to say okay, there's that.

And so we found these two items, I'm going to go ahead and highlight these two items. Right click, highlight, and highlight. And in the new item here, American Red Cross, we consciously paid our charitable deductions now out of the business checking account, so we could track them in the business checking account. So here's the new item. So we're going to go same process. This is after not five, seven, check number 1023.

And we pay the American citizen in there so I have to type it in there, American Red Cross. Okay, and then we're going to say tab, and we're going to add that charitable organization. It's going to be a vendor, okay. And then we're going to say that we paid 250 and then we need the account. Now again, this is optional. All type of thing, it's not something that should be on the business.

Typically, that's what we're going to assume here. That's what we're saying it's not something we're going to deduct on the schedule, see if this is a sole proprietor typically. So what we would then do is, but we still want to track it. So I don't want to just put it into draws in this case, even though it's it's personal related. I'm consciously putting it in here, because I need to track it somewhere to give it to my tax preparer. This is where we're going to use the splits item.

And we're going to say that this is going to go to an account. Now, we'll have to set up an account for this. We're going to try to make this accounts item a little bit longer. So we're going to add a new account. So I'm going to put the account in there. And we're going to actually name it I'm going to say it's a personal deduction, and that's going to say, hey, everything that's in this account, although we'll set it up as an expense account is going to be a personal deduction that we are going to be including, and we'll assign that by naming the account and saying that in the account name and assigning a class to it.

So then we'll say tab, and we're going to set up this account, it will be an expense account. And here's the item we have that looks good. We're going to say Save and Close, Save and Close. And then we'll tab through this. And then the class that we want is now going to be our new class, our tax deductible personal class. So once again, tax deduction personnel, that's the new item that we have.

So then we're going to say, okay, record that. And now let's take a look at our profit and loss by class as we go. So we're going to go to the reports up top, we're going to go to company and financial, we're going to scroll down to the profit and loss but now we have to be using pretty much all the time now, the profit loss by class, that's the one we want. That's the one you're the one we're going to say, Oh 10119 to 1230 119. That's January 1 to December 31, the year we are working on which is 2019. And you'll see that we have this new account here this personal deductions and now it's for 250 but broken out into the tax class, as opposed to our normal kind of deductions that we have over here in the unclassified.

So note that the default the ones that is going to be unclassified. And that's really where our main business expenses are. And then this category is going to track those other items that we're going to be necessary in order to use. Okay, let's go back and do this again checking account, we will then take a look at the next one. We've done the American Red Cross, and now we're going to save the children, which is a nice thing to do. So we're going to say Save the Children, next charitable organization.

And we're going to have that happen on seven three as well. We did both in the same day. And we're going to say Save the Children is a new vendor. So we'll add that with a quick add function, we're going to say will be a vendor, we're going to pay 65 for that. And once again, we're going to need what we have the account now of course Which is going to be the personal deduction for the charity. But it doesn't give us the class field here.

The only way we can see the class field is if we use the splits within the check register. And then we see our class over here. We're going to say that's the one and say, and we can click that, just to show you, by the way to that if I don't click that item and say, Oh, whoops, we didn't save the class. Not a big deal. We could say, okay, record, and it gives us a prompt. You didn't record a class and we told it, remember to give us that prompt.

But we could just say, okay, that's okay. Keep the key. Actually, this is telling me the account numbers off. That's okay, too. We're okay with that. And then we're going to go to the profit and loss and refresh it.

And you'll note what will happen here is that you'll see it we'll see it an unclassified. And we know it's it should be over here because we set the account up to say personal deduction, charity, so we know it should be over here. So notice it's really easy to fix. So even if we did the whole thing, as long as we set the accounts up properly, we can easily go back into this later on and say, okay, everything that's in this account needs to be into the personal deductions charity. Class, it needs to be in the tax deductions personal class, and then just go in here and double click on it, and then double click on this item, and then assign the class. So we can easily go in and then we just close this out, I'm not going to do it right.

Now I'm going to close it out and close it out. So so if we set up these accounts properly, we know exactly which ones should be breaking out into the broken out into this column. Why do we need to break them out into this column? Because although I know that this is a personal item by the account name, it's still affecting net income. So I don't want it here. I don't want it in this column.

We know it doesn't belong because of the account name. All we have to do is go in here and adjust it Which is a pretty easy thing to do once the report is set up, we could just go into anything that's in here. And just double click on it, say, well, there's the item, double click on it. And I'm just going to assign it to a class now, two, tax preparation. And then we'll say Save and Close. And yes, and close.

And there we have it. So now it's removed out of there. So anything that has tax preparation, we're going to basically remove from the unclassified and put it into our tax tracking classes so that we can provide this report to to the tax preparer at the end of the year. Then if we go back to the checking account, and we check that one, we look at it, and then we go to the splits. You can see there's that 65 and you might ask, Well, why doesn't the screen look the same? Why didn't it jump to the check register?

Because we can see that it's really a check. So if I if I double click on this form, it'll give you that same field where we had seen When we jumped when we jumped to it, so we're going to from the financial statements. So we'll close this back out. And we'll say that we have found that one, we've input that one. So that's going to be these items. We're going to continue next time adding the normal expenses and then adding the next time will be the tuition for items that we might need to be able to track might be deducted someplace other than business expenses for college tuitions, and things like that.