Are you keeping good bookkeeping records within your Quickbooks file? If you are just not sure, it might be time to have an expert review your Quickbooks file to be sure you are getting maximum deductions and not overpaying come tax time. Here are just a few ways you may have made small errors in your file that could be making a big difference come tax time.
1. Misclassification of Owner Contributions
If you have donated your own money to your business this year to cover a business expense and simply recorded it as money coming in, Quickbooks will read that as income and it will be taxed as income. You do not need to pay taxes on owner contributions, so be sure to correctly classify this deposit as a contribution from business owner, not simply as income to the business.
2. Misclassification of Owner Loans to Business
Just like when you give your own money to your business, loaning money to your business can also be recorded incorrectly. When you loan money to your business this money is going to be returned to your personal account at some point. If it is just shown as a deposit to your business it will be taxed as income. Specify that this is an owner loan to the business and you will avoid paying taxes unnecessarily.
3. Incorrectly Recording Credit Card Charges
When you use a credit card to buy things for your company, is it crucial to record every charge as exactly what it is, so that it is classified appropriately within your Quickbooks file. For example, if you use your credit card at an office supply store for paper, pens, and printer ink it should be recorded as an office supply purchase. If you simply record the payment to the credit card, Quickbooks will not itemize the list of charges as specific deductions.
4. Incorrectly Recording Sales Tax
Quickbooks is a helpful tool when it comes time to pay sales taxes to the Texas comptroller. If sales tax paid by customers is recorded incorrectly, you will overpay sales taxes to the state. The amount you pay to the state comptroller needs to be recorded correctly through the ‘Pay Sales Tax Liability’ window. Without specifying which part of a customer’s purchase is sales tax, Quickbooks will not give an accurate recording of what you owe.
5. Incorrectly Recording ATM or Debit Card Transactions
One last mistake people make both in their business and in personal finance is incorrect recording of debit card purchases or ATM withdrawals. It’s easy to swipe your card, make a quick transaction and be on your way. It is important to record each debit correctly. Think of it as each time you use your debit/ATM card, it’s the same as writing a check and must be recorded just like a check would be.
