Enter Transaction for Owner Deposit or Loan Deposit Using Bank Feeds 400

QuickBooks Online 2021 enter transaction for owner deposit and loan deposit with help and use of bank feeds. Let’s get into it with Intuit QuickBooks Online 2021. Here we are in our quickbooks online bank feed test file and prior presentations, we set up the bank feed information, we entered some of that information into the system, we’re now continuing to add some of the information into what I would call bank feed Limbo to the financial statements or to be a component of the creation of the financial statements, we’re going to go to the transactions tab on the left hand side, going to close up the hamburger up top, going to sort the transactions down below by the amount so that we can then sort it by the the deposit the increases on top.


So in the prior presentation, we talked about the main items of deposits, we hope to be sales type of items. But we also might have deposits that are going into our system, that would be from, say, the owner, or say from the bank, or say from a loan, like the bank, taking out a loan from the bank. So to consider those, let’s first jump on over to our bank statement. And imagine we have a bank statement. These are not the same numbers. But let’s just imagine we have a bank statement.



And we’ve got the increases on the deposit side. And then we have the you know, decreases checks and whatnot on the checks and withdrawals side of things. So we’re looking at the deposit side of things over here. Now, on the bank side of things, we don’t have much more information other than the date and the amount that was deposited, unless it was an electronic transfer, in which case, we might have some more information for the bank description type of information that we can use to then apply outside a customer.



If we’re talking about something that was us the owner putting money into the bank, then we want to make sure that we can have some way to differentiate our deposit into the banking system from other deposits that are going to be from our normal operations so that we don’t accidentally pick up our deposit as income. If we were to do so then we would be including our deposit as income. And that would be increasing our income taxes and our income side of things, which would typically be bad for taxes, because that would be increasing the income on the tax side of things as well.



Similarly, if we take out a loan, which probably doesn’t happen too often, but from time to time, when it may happen, we might have money going into our checking account then. And of course, again, we don’t want to include the loan money, and income because we might be paying taxes on that as well. So we need some way to distinguish those items in our system, it might be an easy way to do that meaning if most of our deposits come from something like gig work or things like that, where we could see where they’re coming from.



And then we have a deposit that came from like an electronic transfer like a loan, or some other deposit that looks unusual, possibly a larger deposit than usual or a round deposit, which isn’t usual, then we can we can differentiate those items. But you want to make sure that you have some format to differentiate them so that you don’t automatically include them, like I say in income. So let’s go back on over and let’s take a look at our financial statements.



First by duplicating our tabs up top and right click on the tab up top and duplicate it going to duplicate again by right clicking on the tab up top and duplicate it, we will be opening up then our P and L profit and loss as well as the balance sheet going down to the reports on the left hand side. Let’s first open up the P and L report.



And we’re going to open that up and then we’ll do the good old date range change up top starting at a 101 to zero to 1231 to zero, we’re going to run that report closed up the hamburger hold down Ctrl scroll up a little bit to get to that one to 5%. Next, I’m going to go to the next tab on over we’re going to do the same for the balance sheet this time reports on the left hand side, opening up the BLS balance sheet, opening up the balance sheet date range change up top from a 10120 to 1231 to zero, gotta run that report, close up the good old hamburger once again.



So now we’re talking about increases to the checking account. That’s pretty straightforward, we’re going to see the increase on this side of things. The other side However, if it’s coming from us, the owner needs to be going down here say to an equity type of account, which we might be putting in just simply to the owner’s equity type of account, we might add another account that would be recording the increases from us as opposed to the decreases. In other words, if we have a sole proprietorship type of company or the only owner, then we might just we only need really one equity account that would roll over all the income into it.



And that would also have possibly draws decreases money that were taken out for personal use and increases money that we’re putting into the business for investments from our personal account to the business account. Or we might want to break out some of that information such as we have here with the draws meaning we have the owner’s equity, which is kind of like retained earnings, which is going to be where the income is going to roll in from the income statement that hasn’t been going out yet.



So it’s the retained amount of income or it’s the accumulation of revenue over time. And then we have the owners pay and personal expenses, which are like draws meaning, that’s the amount that we took out of the equity section for our personal use decreasing the the business account, taking it into then our personal account for personal use. And then we might have another account here, which would be, you know, like owners deposits or owner investments.



And that would be us taking our personal money and putting it into the business, which hopefully doesn’t happen that often right, we do that at the beginning of the business, and then we’re hoping the business is generating revenue, and we’re always taking money out of the business, not putting it back in but and times are down, we might be putting money into the business, we might be starting the business putting money in or expanding, then we put money in, you may not want another account to put money in, you might just want to put that into the equity section.



Or we can have another account, which will add another account here. So we’ll track all of the money that we put in in a separate equity account, all the money we take out in this pay or personal expenses. And then all the retained earnings are the accumulation of revenue within the business in the owner’s equity account. That’s how we will see it here. Note that if you are a partnership, then of course, you could have 123 equity type of accounts per partner, because you’re gonna have to track this information per partner, right, so that gets a little bit more complex.



A corporation is actually a little bit easier in that you just have the retained earnings, which is like this account here. And then when you take money out, it’s usually if it’s a C Corp in the form of draw of dividends, and dividends are all standardized to stockholders. So you don’t need to track by different you don’t have to track like different dividend payouts for different owners. And when they and when the owner puts money in, it’s usually going to be a purchase of a stock.



So it’s a little bit different. In that situation here we’re focusing in, of course on the sole proprietorship. So let’s go back. And what you don’t want to have happen, of course, is if you just record the deposits, like you normally do just straight from the bank feeds, it might just included an income over here, if it included an income, including increasing the checking account, the other side going to income, it’s going to increase net income.



And when you do your taxes, then it might be included down here in net income, meaning you’re going to be paying taxes on money that you put in, that wasn’t revenue from somebody else. So you don’t want that to be happening. So I’m going to go to the first tab here, and let’s take a look, let’s just pick out the parts and I’m going to pick this deposit here, I’m just going to assume this is us putting money into the business. So we put money into the business, we’re assuming we see this deposit here.



And now we’re gonna we’re gonna record it, I’m gonna have to have some way to recognize I could say, okay, it’s a mobile deposit, I just happen to know that those types of deposits or that dollar amount, or whatever, is what I put in to the business or the loan if it were alone, for example. So I’m going to put in this case, I’m just going to call it the owner, as the vendor or customer, it’s not really a vendor or customer here, because it’s uh, it is the owner.



Also note that you already have an owner here, so I might call it owner, because that’s it, that’s going to be a customer, I’m going to call it owner for for the customer, because we have one as a vendor as well when we took the money out. And it really should be a customer type of type of name. So I’m gonna say customer, and we’re going to call it not, it’s not going to go to this income account for consulting. But rather, I’ve got to make sure to change that.



And if I didn’t change that it would have been included in income. If I just added it in that way, I need to make it go to an equity account, that’s going to be the main point here. And then we could choose the sub account, I’m going to call it owner’s equity. And then they have another one partners contribution. So it’s not really a partner, but I’m just gonna go own owner investment. And that’s going to be an equity type of account. So I’m going to save that we’ll say save it. And then scrolling down. Now I can’t really make a rule for that, unless there’s some type of deposit that I can basically pull out as always being our money from us. But of course, we shouldn’t be putting money.



Hopefully, we’re not putting money into the business on a regular basis, we hopefully are taking money out of the business on a regular basis that has been generated and accumulated within the business. So most likely, you can’t really make a rule for this, you just got to make sure that it’s not being included when you have some other rule meaning if there’s a rule set up, you don’t want it to automatically add a deposit that came from you, right, because you want to make sure that you’re able to break that out.



So you want to be careful that your rules are stringent enough not to include a deposit that’s coming from you that would just be included in income in the income line item. So I’m going to go ahead and confirm this. Let’s go ahead and confirm, confirm roger that and then we’re going to go back to the to the next tab over and say that Run that report, go into the checking account, checking account, checking out the checking. And then we put that in.



So now we’ve got that item in there as the owner investment other side, then scrolling back up top is is not going to go to income, but rather down here in the equity section. So now notice we got these multiple kind of equity accounts, we got the the opening balance, which is an account that shouldn’t really be there, we should take it out of there and put it into equity. But then the accounts that we should have have are the owner’s equity, the investment represents us putting money in, and the owner’s personal expense, and then the income statement account down here, which is basically coming in from the income statement.



Now this income statement really shouldn’t be there as well. But it’s kind of its QuickBooks way of kind of tying in the income statement to the balance sheet to show us it. If I was to go one date up, say I go to the 21st, for example, and run this report, you’ll see that income statement line item disappears. And if this equity opening balance wasn’t there, I’d have the investment, the equity, this personal expenses, and so on.



Notice that this account right here is kind of like the retained earnings, that’s the account that everything kind of rolls into. So in other words, these two accounts here, like if you did financial accounting, Normally, you would you would roll these two accounts into like the retained earnings or the equity account during the closing process. So So these would typically close out, you can do that manually, if you want to do that meaning at the end of the year,



Normally, you would think that these accounts would then roll into the the equity account. So just kind of like the net income rolled into into the owner’s equity accounts so that you attract this on a yearly basis. You don’t have to do that though. Maybe I just maybe I like seeing the investment account for all for the life of the company, that I have put money into the company, and then the equity representing the total revenues, even including the amount that has been distributed, and then the amount of the revenue that has been distributed. I kinda I actually can’t like to see that.



But just just realize that when you give the information to like tax preparers or something that, you know, you’re usually thinking about the you’re gonna have to run this report, for example, this report here, you might have to run this report just for the current year 2020. Just so you see the activity for the current year for the draws in the investments. So in other words, this will be for the life of it unless you close it out.



Or if you want to keep it there, you can run the report for the current year to see the activity for the current year on the income statement. This, by definition are temporary accounts and QuickBooks will kind of force it to close out on a yearly basis. And it’ll start back up at zero on January. If you have a normal December calendar year and type of business.



Now, if this was a loan, we’d have the same kind of thing and the income statement, we wouldn’t want to see it showing up on income over here, I’d go back to the balance sheet. The only difference then would be that instead of including it into the equity section, we would want to set up another account for a loan account which would go up top and so we’d set up the other side not going to income, but a loan increase in the checking account the other side then go into like a loan payable, which would be a liability type of account.



So that’s going to be the the other the other side of the other format. Those are the two types of deposits that are typical, that you might see typically not something that happened every every day during the business, but that happened from time to time that you want to make sure that you’re picking up not as income but either as an equity type of account if it’s from the owner or as a liability type of account, like a loan payable type of account if it’s from a loan

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