In this presentation, we'll talk about tracking tax related deductions within our business account using equity accounts using the equities that draws accounts specifically talking this time to prior periods prior months. In other words, we're discussing a method for tracking tax related items that are personal tax related items within the business account by recording them within the drawers account. However, if we start this in the middle of the year, then there could be a question of how do we get the prior data in the system if we hadn't paid it out of the business checking account and therefore haven't been recording it in the drawers account for the prior portion of the year. In this presentation, we'll discuss that that process and see if we can get that information for prior year data into the QuickBooks system so that we can provide it at year in with one report to our tax preparer.

Here we are in QuickBooks. We currently have the open windows open, you can Open the open windows by going to the view drop down and selecting the open windows list. So in our example, we've been entering data for the month of March. And that's when we're going to say, Hey, we just started to get to this method where we're going to be entering data from the bank statement into our system related to these items. In other words, if we take a look at our bank statement, it's for the month of March, and we started this method of recording transactions in our business account, paying them out of our business account, even if they're not business related, but if they're related to items we want to track specifically for tax purposes, then we're going to record them in our draws accounts. So we have the american express the child savings.

What if these, however, are the first month that we started implementing this method? And we had some of these items that we had paid in prior months in our case in January in February, which we had paid out of the personal checking account, because we had not yet implemented this method. Can we get those that data into the system. So we have a full year's worth of data by the end of the year that we can then run one report on and have everything tracked for us. Well, we can think about how to do that if I minimize this, we note that obviously going forward, the way to do this is we would want to pay anything we want to track under a cash basis method out of the same account, in this case, our checking account that was paid out of the checking account here for the business, if we had some items that were paid out of the personal account, and we want to track them in these drawers accounts so that we can process them, we could enter basically a journal entry.

We'll try to do this basically, without a journal entry. Let's look at the reports first, so we'll go to the reports drop down. We're going to go to company and financial. We're going to go to the balance sheet standard balance sheet standard. We're going to customize the report and run the date range the date range being full Let's see if I can pull this down a bit date range being 4010119 to 1230 119. That's going to be the year that we're working on January through December 2019.

I'll change the font while we're here, go into the fonts and numbers tab, font size, making it 11. And okay, and, okay, and Okay, I think that was yes. And okay, okay, then we're going to scroll down, we're looking at these equity accounts at the bottom. So all this information we have so far, it's just for the for the one month that we've entered. So now we want to go back to January and February and discuss how we might do that. Well, of course, we'd have to find those transactions out of a personal account that we've recorded, and then we could try to enter that into our data here.

One way to do that is we can go to the lists drop down and go to the chart of accounts. And then we're going to go to these equity accounts and let's say that we found some charitable deductions that we want to Now enter from January and February into our current data, we're going to double click on that, we can't go into check register, because we didn't pay cash. So there's got to be some other accounts, we're going to affect this register. Now it's going to affect just the, you know, primarily the draws account, and then we'll have to select another account. So what we're going to do is we're going to say that this was a charity, let's say went to American Red Cross. And it's kind of tricky here, the decreases are actually what we want here.

That decrease means it's increase in the draw of the accounts kind of funny. These registers can be a little confusing, but you can see that what's happening here, when we entered the prior transactions, they were decreases and so this one is going to follow suit will enter our data into the register directly. Now this is a little bit confusing because the register does have these transactions. We close out the register to close out the drawers at the end of or the beginning of the next year. And then we enter data for 2020 as an example, we're going back to 2019. Here, we're going to enter data for January of 2019.

So we're going to say, Okay, this happened on January 15, of 2019. So that is the date. And we're going to say that we're paid American Red Cross again, American Red Cross. Now it's a little confusing because these are decreases here. So we're just going to follow follow along with that, that's going to be the, we're going to say 200 was paid in January, we can't go to cash as was done here, checking account isn't the other side. Because we didn't we paid it out of a personal check in.

So what we're going to do is just take it out of one equity and put it into another equity. In other words, the other side is going to be the owner's equity. So total equity won't be affected. We're just taking it out of one equity account and putting it into the other tracking it in that format. So I'm going to say okay, and then if we go back to our balance sheet, Say refresh, then we're going to look at in this case, the chair to be charity has the 515. If we double click on that, then we'll see, okay, there's the 200, related to January.

So now it'll be we can, in this format, put the full year's worth of data. Now, of course, going forward, we don't want to have to do this, we this is just to shore up until we get the procedure down to know which amounts we're going to be paying out of the business checking account. But this is how we can get a year's worth of data for that first year when we make the conversion. And then if we take a look at the owner's equity, on the other side of it, we should have the other 200 on this side. So it's, it's gonna be on this is what it's going out of one equity account and into another equity account. So in this case, it's increasing this equity account, and decreasing draws however you want to think of draws draws is like a contra equity account, but any account in any case, one equity accounts is taking equity up, the other equity account is taking equity down.

So total equity remains the same. And of course, we can do this for any of the other accounts we have something with if I close this back out, and we go back to our chart of accounts in the open windows, and we say that we paid some childcare as well. Then if we double click on that item, we'll go into the register for childcare. Again, we closed it back out. So these two transactions have to do with closing we may not have those if we didn't go through this closing process if we if we weren't doing it closing entries. So we're really going back to 2019 recording before this one, saying what happened in January.

So we'll record the date here of Oh 116. Let's make it 15 just to keep it the same 19 so in the prior year, so January 15 2019. It's going to be above this one now. And we're going to say that this went to the same vendor, which is Going to be ease childcare, we're gonna say tab, and then it's got to be a decrease. So just like this one, so it's going to be going the same way of 125. And then the other side can't be the checking account.

Now because we paid it out of a personal checking account, we're going to take it to the other equity account, so we're going to take it to the owner's equity. So it's just gonna one equity accounts going to go up, the other is going to go down one equity accounts going to take total equity up when equity is going to take total equity down. And if we enter that, then we're going to say okay, and it's going to pull it up to the top because now this happened in January prior to when we started doing this checking account isn't affected. closing this back out, going back to our balance sheet, refresh, and if we go now to our childcare, double clicking on it. We'll see now that we have the, this amount of 125 in January, if we double click on it, it's going to go back to our register It's in essence, it's a journal entry that we have closing this back out.

Closing this out the other side is in equity now, double clicking on it, and we can see the 125. So all we're doing is taking it out of one equity putting it into the other. So we can support this information. We may even if we if we do this, want to go into the memo and put in the check number that we found it from an out of our personal account, so that we log that and we have that in there so we know where this data is coming from. So we can close this back out and close this back out and you can see that we can go back in and to the prior months and record a full year's worth of data in this format go into the register, increasing the visa counts as needed, and then recording the other side to the owner equity for a sole proprietor and thereby making the total equity the same and recording a year's worth of data.

And these accounts again, going forward We don't want to have to do that anymore. We want to make sure that we're making the checks out of the out of this proper account. So that we can, it'll easy it'll be easy for us to just see it on the bank statement and record it in here directly as we record all the other transactions for our checking account.