Tax Guru – Ker$tetter Letter

Q:

Your website is very helpful. Thank you!!

 

I am using quicken home and bu. 05.  Recently, our business (a small co. offering professional services) started taking credit cards.  The credit card company automatically credits our bank account with the amount of the credit card purchase less the charge for doing the transaction. 

 

Before we started taking credit cards, I just recorded the client income as deposits in the quicken checkbook.  Should I now just record the net amount as a deposit?  This would not give me a record of what the person actually paid.

 

Any help you can give me in this matter would be appreciated.

A:

It’s very easy.  You need to enter the deposits as split entries on more than one line for each.

You post the full amount to your income account and then on the next line have a negative entry that goes to the “Credit Card Charge” expense account.  

This is the exact same way paychecks are supposed to be entered; starting with the gross pay and showing each of the withholding amounts on a separate line, to arrive at the net amount deposited.

Good luck.  I hope this helps.  Your personal tax and accounting advisor can show you in more detail if you need more explanation.

Kerry Kerstetter