In this presentation, we will discuss the tracking of tax deductions related to an IRA individual retirement account within our business account using a classes method within QuickBooks. Here we are on the homepage, we currently have the open windows open, you can open the open windows by selecting the view drop down and the open windows list, we're going to open up our check register by going to the banking drop down and going down to the use register will then open up the checking account. That's the one we want. We have so far been entering transactions directly from our bank statement here into the check register. And we'll be continuing with that process. Now here is our bank statement.
We've been entering these checks these transactions. These are transactions that we paid out of a bank that we have seen now see on the bank statement and we're going to record that into our check register. We're now on this transaction related to E trade for an IRA. Now this is a transaction unlike these items down here, which is these, we're gonna say our payroll transactions, normal business transactions, this is going to be an IRA, which we are saying is not business related. And this is a little tricky again, because remember that businesses could have some type of retirement account related to it like a 401k plan, or a simple IRA or something like that. Here, we're saying that this has not been set up for this account.
And or this is an IRA, outside of what is in our account, but something that we want to track and for tax deduction purposes, therefore, we're going to consciously pay the IRA out of our checking account so that we can then track it in our business QuickBooks setup. Notice what an IRA is an IRA can be a little bit tricky just to think about in and of itself, it's going to be something that's deductible because we're putting it into an investment account that we're securing for retirement. That's why the IRS may give us tax benefits for It because we're basically saying, Hey, we're providing for ourselves around retirement. And by doing this. So you'll note that it's really kind of an asset, when we track it, it's going to be an asset type of account. But we're going to record it here as a payment, because that payment is could possibly be a kind of like a deduction, something that will affect our taxes.
So well. So just be aware of that when you track the IRA, what's in the IRA stocks and bonds, typically, those are assets, you can have to track them as assets that will remain over time. When we pay for the IRA. We kind of think of it as from a tax standpoint, something that's deductible, possibly, because we're getting a tax break for it. So just be aware of that we're going to put it in the system, it'll look much the same. And we'll discuss that a little bit more as we go.
Before we do though, let's let's add just one a normal kind of transaction. There's been a paycheck transaction. We're not going to get into payroll here. I just want to note that this is just a normal type of transaction. We're going to assume that payroll happened outside but like an ad paychecks some other firm that's going to help us process payroll. And now we're just entering that paycheck, the net check from our bank statement into our QuickBooks file just to show a normal business expense.
And then we'll go back up here and we'll deal with the new thing, which we consciously did different, which is to record this IRA account within our business account instead of the personal. Okay, so let's do this. Here we are on the check register, we're going to say the first one, we're going to say as of 331. And that's going to be the we're going to do the payroll check first, just to give an example of a normal type of checks. So it's going to be 1030 1043 that we want. So it's going to be check 1043.
And then that's going to go to Adam. So Adam Hamilton will populate automatically. So there's Adam, tab, we're going to set that up at 3539. And then we're gonna have to assign the account and the reason it didn't pop automatically is because it's special. payroll account. And QuickBooks is a little dubious on on assigning a payroll type account, because they want you to go through the payroll process their payroll.
So, in any case, we always have to go back in when it's payroll and assign it, we're not going to get into recording payroll, and the problems and issues there. Just note that it's a normal business type expense. So that's kind of a normal expense. Now let's do the new thing that we had. So we'll go back over here and say that's normal business expense that we had, and then we're going to pay the IRA. So this is the new thing that we consciously did out of our checking accounts, not a business expense, but when we want to track and I'm going to change the date back down to 1021.
For this one, check numbers gonna be 1040 1040 roger that 1040. That's the check number. And this is going to go to E trade, which is kind of like an online banking trading that you can do stocks and bonds online. We can't set up an Ira under something like an E trade, so it would be in some type of investment company, this one being called e trade. And then we would invest in something like stocks and bonds, which are under the umbrella of a retirement plan. And in this case, we're saying it's an IRA.
So again, get advice on how to set up the IRA. But that's what we're just practicing entering the data here, assuming it's not a business related item, and when we want to track, so we're going to say quick add, vendor, and it's going to be $1,000 we put into the IRA. So then we need to assign an account for it. We're just gonna call it personal deduction, again, Ira. So now it's just gonna be another personal deduction IRA tab, we're going to set it up so we'll set up and it's going to be an expense and again, note that might be confusing to you because it you know, you're setting up stocks and bonds, those are assets, we're gonna have to track them separately, then here, but we're setting it up as an expense here because this is when we made the payment and therefore when We might get a tax break in some form or fashion.
So we'll say, Save and Close. And that's what we want. We're going to then go to the splits. And we're going to go to the classes. And we'll make this go to the class of tax deductions, personal and record. Now we're going to go to our reports and see what happened.
We're going to go to the reports drop down, we're going to go to the company and financial, we're looking for the profit and loss by class profit and loss by class, changing the dates from Oh, 10119 to 1230 119. That's January 1, to December 31. The year we're working on 2019. Scrolling down, we're going to see then that we have now these personal accounts, we're looking for the one related to an IRA there is it's broken out into our tax deductions not affecting then net income for the unclassified our default, which is going to be business related items, these are business related. These are non business and these are items we can then give To our tax preparer, if we want the detailed report for it, we can double click on it. And that'll show us more detail of the transactions that happened within it for that time period for that year.
So we'll just go back over here, we're going to say that we found the IRA, that one is done. And now we're going to do this again, we're going to do it for the state taxes for the property taxes. This is going to be assumed to be something like taxes on our home, that may not be something that's deductible for the business, but which we want to once again track. That's what we'll do next time and we'll add our last normal expense for our payroll for Erica, that's our employee next time