In this presentation, we will take a look at tracking medical deductions within our business account using what I'm calling an equity method 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 list. We're now going to be entering deductions and the costs that we paid out of our business account related to medical expenses, medical expenses that aren't typically going to be included as business expenses. Now note there are circumstances where medical expenses might be something that's deductible as a business expense and may not. Our assumption here is that we have these costs that are not going to be business related costs, but that we need to track something that our tax preparer asks for at the end of the year.

And we want to be able to have a method to track them as easily as possible. So we're going to put them into our system, we're going to consciously pay them out of our business account, so that we can track them here in our business QuickBooks account. But then make sure that we do not include them as an expense, but rather as an equity account, so that we can track them and not distort our income statement. To do that, we're going to go to the banking section up top banking drop down, and go to use register, and go to our checking account. So here is our checking account bank register, if we go to our bank statement now, this is our bank statement. for the month of March, we have been entering this data from the bank statement into our system consciously recording costs, making payments for anything that would be business related.

And taking a look at the special items that we think are things that we want to track over and above apart from business expenses, but still things that we need to track for tax providing purposes at the end of the year. So we're just going to enter this into our system. Now if we paid it out of the checking account, we're going to need to enter it into our QuickBooks system in some way. We're manually putting it in there with the bank statements, we're taking the bank statement, putting it into our checking account. And we paid them with checks. Remember that you could have electronic transfers, as long as we paid two out of the checking account, it'll be on the bank statement.

We're going to start here with a normal transaction that we would typically say Edison is a Electric Company. So if we paid them, that's our electric bill. That's a normal business expense. And then we have these items, which is a Blue Cross, we're going to say that's medical insurance. And we're going to say that that's something that we don't pay out of the business. Now again, does the business provide medical insurance?

What type of entity are we? Where can we deduct that will differ based on the type of company we are the type of business format we've set up? We're not getting into all that here. What we're saying here is with the format that we're assuming this medical, this health insurance for the personal side, is not something that we're including in business expenses, but something that we may track, we're going to say hey, this is is not business related for our books, but we want to provide it, track it give it to our tax preparer at the end of the year, and they can decide if and where it should be deducted on tax preparation. So that's insurance. And then we have other medical expenses, like we might go to the doctor and have to pay out of pocket costs for the doctor.

And so we could track that all in the same medical expenses, or possibly probably, what we'll do here is break out the insurance costs versus the doctor bills. And then we might have other medical costs like prescription drugs or even non prescription drugs. And again, we might want to break that out into a separate account, or just include that with the doctor and the drugs. That's what I'm going to do here. So I'm going to break out we're going to have to make a decision here I'm going to say okay, I'm going to break out that insurance separately into a draws account, and then put all other medical costs, whether they be the doctor bills, the visits that are over and above insurance, and the drugstores into all other medical costs. Also note that you may not need to track medical costs depending on how high your adjusted gross income is.

So if this was something that would depend on prior years, probably you'd have to say, well, is this something that my tax preparer is asking me for, or something that I don't need to track, and then make that decision if it's something that we do need to track more closely, to provide it to the tax preparer, this is one method we could use to do so. So let's go ahead we're gonna enter this one in first is just a normal expense just to get a feel for just normally entering the expenses in the check register, would look like this. So we're going to say this is on 1016. Check number 1035, say 1035. And this is going to be Edison. I'm just going to type in Edison, it'll populate for us because we've paid Edison before, and it's for 598.

And it's a utility bill. It's an expense. If I select the drop down, it's an expense type account. This is just a normal business expense. So we'll say Enter. And then we're going to go to our next item, which is going to be our item.

That's not a normal business expense, but one we want to track that being to the BlueCross, which we're going to say is our health insurance provider. So we're going to go back over here, and we're going to say, all right, this one on 319 1030, I have to 1035. That's great. This is going to be a duplicate number. Sorry about that. But just know, just hopefully, that doesn't bother anybody too badly.

And then we have the Blue Cross. We don't have Blue Cross here yet. So we're going to type in Blue Cross. And that's going to be a new vendor. So we'll select tab, we're going to quick add the new vendor, it's going to be a vendor type, okay. And we're going to say pay BlueCross 500.

And the point here is that we don't want to put it to an expense account, because it's a personal item for us. It's not a business expense, but when we want to To track, therefore, we're going to put it into a separate draws type account. So I'm going to call it draws medical insurance, you can just type it in there. And then we're going to select a tab. And it's going to say, do you want to set this up? I'm paraphrasing, we're going to say, Yeah, please set it up.

And it's going to be not an expense type account. That's the key. That's the key, it's going to be an equity account, equity account, it's going to be a draws account. So that's it, we're going to say Save and Close. And then just enter this, we probably should put a memo I'm not going to, and I'm going to keep the check number. And there is that one, next item we have is going to be for the doctor visit.

So doctor visit again, has nothing to do with the business. I mean, again, we have to be healthy and whatnot shouldn't be a business expense, right? But it's not business related. Specifically, it's personal. So but we want to track it. Therefore we consciously paid it out of a business account so that we can track it in this QuickBooks file where we are good at Tracking stuff.

So we're going to go back over here and say this is going to be on 319 1036. For this one, and this one, the vendors not here at our doctors, just Dr. e. That's the actual name. That's what we write the check to. And we're going to say tab. And quick ad. That's a made up name, obviously.

But Dr. E, that's our, that's our doctor for this problem. And we'll say, okay, and the amounts going to be 195. Now, again, we could put this into the same medical draws, but I'm going to say it's, let's put it into a different one, and just call it draws for medical costs. In other words, one, we don't want to make it an expense account. Two, I'm not going to put it into the same draws account that we set up for the insurance because we want to break these out so that we can give them a separate report to our tax preparer and hopefully make life a little bit easier on the tax for Because we would really like that person there nice. So we're going to say draws medical costs and tab and set that up.

And key not going to be an expense, we're going to put it to an equity account. So it's equity account. And we're going to say Save and Close, and then record that item. So that's the next one we want. And then we've got one more that we're going to record. So we got Dr. E visit there.

And the next one's to write a, which is a drugstore. So that's where we buy drugs, prescription drugs that we need for medical purposes. And we're going to then put that in this again, if not business related. So this is our non business related item. So this one happened on 320. Check number 1039.

And this is going to I don't think we have Rite Aid yet. So I'm going to type in the vendor Rite Aid, drug store. tab, quick ad vendor is what we want. And we paid to Rite Aid $37. And this one we're going to put to our same draws for medical costs draws for medical costs. That's what we want.

And we're going to record that. There it is. So now let's see what our reports do go into the reports drop down up top, going to company and financial and scrolling down to the balance sheet standard. We're then going to change the dates up top from the customized reports section 2010119 to 1230 119, that's January through December 2019 2019. I'm going to change the font size to a little bit larger over here. Not necessarily have to do this fonts change to the size 11.

Okay, so here we have to check in account checking account double clicking, I'm going down to the bottom of it, we see that we now have these medical costs that came out, we pay the utility bill. And that's normal. And then these are going to be personal items we paid out of the business checking account. So but they're really just draws, right, which is like we drew money out of a business account. And so we're going to put them in as draws on the other side. So we're going to close this back out.

And the other side is going to be draws. But we're going to specifically create the draws account related to medical costs and insurance. And then we can provide this to our tax preparer at the end of the year, and we can provide them even more detail by if we double click on this, we get the report, January through December and we can say hey, here's what happened during this time period, and I mean, if you have any questions about is this medical expense deductible is that not you know, maybe the prescription drugs are deductible but that new jacuzzi we bought that was it But maybe that's not deductible as a medical cost, or maybe it is, I don't know. So we put it here, we can give it to somebody, or give it to the tax preparer. And we can ask about it with the detail.

And we're going to close this back out, we're going to make that separate from the cost here from the insurance. So that was the insurance. And the costs are going to be up here. And so the insurance typically, if we want to, whatever we need to do with insurance might go into a separate area for our tax preparation, the other costs here, then we might have to go through some of these costs and decide whether or not they're deductible. So it's nice to have them listed out we can just put any medical items here and see if given the attack prepare, ask any questions with the detail that we have entered into the section for close this back out and we go to the profit and loss then reports, company and financial profit and loss. Changing the dates from Oh 10119 to 1230 119.

So that's the month For the year of 2019, January through December, we can see that we had the one which was Edison utilities in this account, which was a business expense that we entered. If we go into that we could see there's our utility bill that we paid. That went into our check words for close that back out, but the medical expenses are not here, not affecting net income. So they're not distorting our picture of how we did in terms of net income because those are personal items should not be in the calculation of the income statement. The calculation of net income