Learn how to categorize the transactions you download from your bank or enter into QuickBooks.
Each time you put a transaction into QuickBooks, you need to categorize it. This includes transactions you download from an online bank account or enter manually.
When you categorize, QuickBooks puts your transactions on the correct line of your Schedule C. This also organizes your income and expenses so you know what areas of your self-employed business have the biggest impact.
Learn about income and expense categories in QuickBooks Self-Employed
Your personal and business income and expenses may be in the same accounts you connect for online banking. QuickBooks Self-Employed makes it easy to separate your personal income and expenses. This makes sure the right money is included in financial reports and Schedule C.
Negative transactions on the Transactions menu are expenses. You can mark expenses as Business or Personal.
There are many expense categories in QuickBooks. These categories match with specific lines on your Schedule C.
Positive transactions on the Transactions menu are income. You should mark income from your self-employed business as Business.
QuickBooks includes business income when it calculates your estimated taxes. It also shows up on your financial reports. So, you should only categorize money that comes from self-employed work as business.
This includes receipts or sales. Other types of business income include any bad debts you recovered (if they were written off on prior-year tax returns) and interest from business bank accounts.
You should mark income that's not part of your self-employed business as Personal.
You should categorize all money that's not part of your self-employed work as personal. This includes income from others who share your bank accounts.
Personal transactions and deposits, such as regular paycheques from an employer (as long as it has taxes taken out), should be marked as Personal.
See an example
Still not sure what counts as business income? Here's an example:
- Let's say you have a "regular" T4-type day job. Your day job gives you a paycheque every 2 weeks. It already has taxes and other deductions taken from it.
- You also work nights and weekends as a personal chef. Your chef job pays you per job, in full, without any deductions.
Your day job is personal income. Your chef job is business income since it's from self-employed work.