Accounting & Bookkeeping & Small Business Forum

[g2graphicsmore]

I just launched a graphic design business, and I am using Quickbooks Pro 2006 for my bookkeeping.

I have a couple of questions:

1. What is the best way to pay myself, and how do I categorize it in Quickbooks?
2. Verification on this setup: for print jobs, I receive income as Print Production Income, then I have a COGS category for the actual prints costs. Is this correct?
3. Accounting Practices. Can the business (sole proprietorship) pay for these expenses: auto insurance (wife's vehicle is on the policy, but it's not business use), cell phone (again, wife is on bill but not for business use). What about the house utilities? it's a home based business.

Thanks for the advice!!

[stasia2003]

g2graphicsmore wrote: I just launched a graphic design business, and I am using Quickbooks Pro 2006 for my bookkeeping.

I have a couple of questions:

1. What is the best way to pay myself, and how do I categorize it in Quickbooks?
2. Verification on this setup: for print jobs, I receive income as Print Production Income, then I have a COGS category for the actual prints costs. Is this correct?
3. Accounting Practices. Can the business (sole proprietorship) pay for these expenses: auto insurance (wife's vehicle is on the policy, but it's not business use), cell phone (again, wife is on bill but not for business use). What about the house utilities? it's a home based business.

Thanks for the advice!!

1. Payments to yourself are considered "Owner's Draw". Set up an equity account that says it.

2. In a case like this, you may want to consider using the "percentage of sales" method. There are so many print jobs and it will probably be easier to just use a percentage to calculate CGS.

3. The one thing you want to do is keep your personal expenses and business expenses coming out of separate checking accounts. That will easily solve that problem. If the expenses you listed are not business related, then they need to come out of the personal account.




Others may have additional information. :D

[g2graphicsmore]

Thanks for the quick reply!

1) Got it!

2) I don't understand what you mean by "percentage of sales" method. Could you elaborate on this?

3) Got it. I will create a separate cell phone bill and insurance bill instead of combining both mine and wife's on one bill, though it will more expense getting separate bills. Is this a proper way to handle the cell, for instance, because my wife is on a shared line. If I put her phone on an account and mine on a different, we're going to have to pay full price for two accounts instead of a shared account. Or is it OK for the business to provide a cell phone for the wife, though it's mostly for personal use?

Thanks again!

[dp1903]

Quote: 3. Accounting Practices. Can the business (sole proprietorship) pay for these expenses: auto insurance (wife's vehicle is on the policy, but it's not business use), cell phone (again, wife is on bill but not for business use). What about the house utilities? it's a home based business.


Any cost which is not business related may be paid for by the business but is not considered a business expense but a "draw". I would recommend keeping business and personal expenses separate as much as possible.

In regards to cell phones, in order to deduct any of the expense as business, you must keep a log of all its usage no matter whether it is used for business or personal. This is called "Listed Property" by the IRS and there are specific guidelines to be used in accounting for such property. See the IRS pub on depreciation of assets, chapter 5 I believe.

As far as deducting house expenses such as mortgage interest, home insurance, utilities, repairs, etc. the IRS has strict guidelines to be followed in order to be able to deduct them. You must use a certain area in your home EXCLUSIVELY and REGULARLY for your business. Consult the IRS website for specific guidelines.

[accounting-software]

Taking cash out of your company doesn't necessarily equate with paying yourself. Most owners have an 'owners' account. You can withdraw cash from the business and if you record it as a transfer from your owners account then it's just a loan from the company to you. Then, when you declare your salary or dividend it can be recorded as a transfer to your owners account and you need not transfer the cash at that point.

[Johnhanry]

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[Johnhanry]

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Than you!!

[puacc]

thankyou