Owner's draw is not for indies.

Hi June,

Thanks for sending me the Quicken Categories For Indies List. I will go back and get your books later.

I am having a little trouble with how to categorize a Business Draw in Quicken 2011. I keep my business account and home account as separate Quicken files. So there isn't a way to "Transfer" the money. I usually write a check from one and deposit it in the other. I will try the X Change-In category on your list when I record the deposit of the Business-Draw in my personal account.

Have a great day,
Jennie


Hi Jennie,

This really calls for a lengthy explanation, but I'm going to try to make it short and clear.

Sole proprietorships don't have an owners draw situation. That's a transaction within a corporation.

A sole proprietor transfers money from one account to another. In your case it may be from a business checking account to a personal checking account.

In Quicken you may simply [hard bracket the account] in the category field.That will show the transfer in both the out and in accounts

But, if you want to give the transfer a category of its own at each side of the transfer try this:
From the going out side make it an expense category MONEY TO PSL ACCT
At the receiving side make it an income category MONEY FROM BUS CKG ACCT 

Please add a comment letting me know if this helps.

Best,
June

Recordkeeping-Quicken-QuickBooks

June- I'm at wits end finally trying to get my books in order. Wondering if you are able to help or if you have recommendations for someone out here in Los Angeles. Found your site after google search. I'm writing this after spending the day, yet again, trying to figure out how to set up my QB accounts and after buying YNAB to try and get myself on a budget. AAAAhhhhh!!!! I'm no closer than I was 6 hours ago and need pro help on this. I'm a Freelance Multimedia Producer ... 5 years

Thanks
Mike
Sherman Oaks, CA


Hi Mike,

I understand. I really do. First, forget about QuickBooks. It's way too complicated for a newbee. If you want to keep records on computer use Quicken. Buy the easiest, cheapest version. Go here for my free list of Quicken Categories For Indies .

I really should have listed that as second. Because first comes: What do you want your recordkeeping to do for you? If it's simply to give you income and expenses at year-end in preparation for your tax return, you can do that manually or on computer. If you want to go the easy, simple, manual route, take a look at The Confident Indie: Five Easy Steps . It explains a manual system and has worksheets for your 2010 tax return. Most of my indie clients prep for their tax returns using this method. It really works.

If you want monthly or quarterly reports of income and expenses, or you are really comfortable with #s and computer data software rather than prose and audio software then use Quicken.

Also, if you are going backward and redoing 2010, then I suggest manual. If you are starting to do 2011, then either/or.

Hope that helps.
-- June

Owner's Draw

Hi, June!

Sure do enjoy your column! Am curious: when using “owner’s draw,” in QBooks, wouldn’t that be considered income to me?

Thanks for your help! If that is somewhere in your blog, already addressed, thanks for pointing that out.

Warmest regards,
Rhonda
Anacortes, WA


Hi Rhonda,

Glad you like my column. Thanks.

I will assume you are a sole proprietor. And there is no "owner's draw" for a sole proprietor. The money you take out of you business is not your profit.

Many self-employed people have a fuzzy idea about their own business profits. They think that the weekly, monthly, or occasional checks they write to themselves -- called owner's draw in the corporate world - is their income or their salary or their profit. They are wrong.The checks a self-employed makes out to herself have no bearing whatsoever on her income, expenses, profit, or taxes. Whether you write yourself a $100 or $1,000 check every week you are doing nothing other than altering cash flow by moving money from one place to another. It's called draw because you are drawing money away from someplace.

Your income, better called "net profit," is what is left after you subtract business expenses from gross income. Has no relationship to how much money you took out or put into your business.

BTW -- for indies I urge Quicken. It is much easier than QuickBooks. Visit here Quicken Categories For Indies and I'll send you a 7-page list of income and expense categories suitable for an indie business using Quicken. It's helpful even with QuickBooks.

Best,
June

Quicken for Recordkeeping

June --

From Olathe, KS. ... Automotive Training Consultant ... 20 years as an indie.

What bookkeeping software do you recommend? Or do you recommend using software for bookkeeping. I have the Dome software which works somewhat. Would Quicken be better?

-- James


Hi James,

If you want to keep records on computer then I strongly recommend Quicken. It is the easiest and most flexible of all the bookkeeping software I've used. It was introduced to me by an electrician 20 or more years ago, back when very few indies were using software for recordkeeping.

Since then it's developed a lot of unnecessary bells and whistles. I have not yet used the 2011 updated version. I recommend the basic Quicken Starter Edition 2011. You can always upgrade if you really get into all the added features.

For a guide on adapting Quicken's expense categories to an independent professionals business go to my website and under Places To Visit select Quicken Categories For Indies.

Best,
June

Easy Recordkeeping

Hi June,

I live in Philadelphia, PA. I'm a calligrapher and journalist and I've been an indie for 5 years (and I'm originally from Santa Fe!)

I wanted to ask about the worksheets you provide on your website. What format are these in? Excel? PDFs?

Are they meant to replace an accounting method or are they intended to use at the end of the year for tax time?

I'm having a hard time finding simple accounting software and was wondering if you have any suggestions for Excel spreadsheets (other than me making my own). I was going to go in any copy the system you suggest in the book but I just wanted to make sure these sheets don't already exist for purchase.

QuickBooks is just way too complicated for my needs...

Many thanks,
Mara


Hi Mara,

Just returned from vacation in Jemez Springs. Being an ex Santa Fean I assume it's an area you know And, BTW, my daughter lives in Philly.

I am not sure what you refer to when you say worksheets that I provide on my website. On my site I offer for sale my 2010 manual recordkeeping how-to guide:The Confident Indie: Five Easy Steps. It has my worksheets in it.

Five Easy Steps shows indies the most simple way to keep records -- manually. In the 75 page publication are the worksheets which I developed over more than 20 years of working with indies.

The worksheets are PDFs; they are not in Excel. They are your means of presenting your self-employed tax information to your preparer.

Accompanying each worksheet, if necessary, is a description or instructions. Some of the worksheets follow the format of an actual IRS form but modify it in such a way as to make it more understandable and useful to you and your tax preparer.

First comes the recordkeeping; then come the worksheets.

Excel is not a recordkeeping program. It is simply a spreadsheet. Just like those old systems that had you putting things in little boxes then adding them up. Excel does the addition for you. It does nothing more regarding recordkeeping.

I agree with you, QuickBooks is too complex. It's for professional bookkeepers and accountants. It's a double entry system not for the layman. If you want to keep records manually, I strongly recommend you buy Five Easy Steps and follow my Most Simple System method. If your want to keep your records on computer I highly recommend Quicken -- just ignore all the latest bells and whistles. As one of my Learning Tools I did have a pub on adapting Quicken for indies. [Quicken is really is for W-2 people and small businesses.] However, it's out of date re the Quicken version I reference and I haven't yet revised it.

Hope that helps. Please let me know.

Best,
June

Quicken Records & Business Meetings

I exchanged a series of emails with Marianne, a writer/photographer, that I have abridged and am passing along to you.


Hello, June.

I just finished reading your The Confident Indie: Five Easy Steps pub. At the end, you refer to a pub you are writing about tweaking Quicken to use for business records. Is this available?

Pub was great, BTW.

Marianne


Hi Marianne,

Glad you liked Five Easy Steps. Thanks for letting me know.

No, the new petite pub is not yet ready. I previously published a how-to guide to computerized recordkeeping. It was a companion piece to my book Self-employed Tax Solutions . It explained how to adapt Solutions' manual recordkeeping method to Quicken. But it’s out-of-date and needs revision.

Do you currently use Quicken? Are you PC or MAC?

Oh. I went to your site. Doesn’t work???

Best,
June


Hi, June.

I use Mac and PC, but prefer my Mac (newer, faster, more memory and just cooler). If you have any suggestions, this struggling taxpayer will promote you to goddess level.

Yes, that was my old site. My current site does work. ‘Tis a sad tale of down payments wasted, deadlines ignored, false starts and real disasters. Do you know any good firm who can make a website for video folks???? Lots of it will link up to videos already posted on Vimeo, YouTube, etc.

Thanks for all your help, June. I will be buying other books!
Marianne


Hi Marianne,

I like goddess. I'll work on it. For your website check out Mike Hartley web designer at http://bigflannel.com. Here's a site Mike did that includes video http://www.leftright.tv.

Best,
June


Good morning, June. Thanks so much for the referral. Wow, Mike's stuff is great and he clearly works at the TopTop of the tree. My partner (and husband) and I were just looking over both sites. Again: Wow.

OK, transition:
As one small business owner to another, what is your opinion re the value of joining the Chamber of Commerce for marketing purposes?

Thank you for all your help and your ab fab site and materials. I think every small business owner/indie should read your site if only for the shot-in-the arm reminder that you ARE a business. Your message empowers -- I know that term is overused and trite now, but it is the best one this wordsmith can use.

Cheers,
Marianne


OK, Marianne, first things first.

I agree on Mike’s work.

Since I am in the process of writing how to adapt Solutions' and the Five Easy Steps' manual recordkeeping method to Quicken, could you tell me what you find are your difficulties in setting up & using Quicken for your indie business?

[If any of you are having problems with making Quicken work for your unique indie venture please leave your comments or email directly to me at june@junewalkeronline.com.]

On the Chamber of Commerce, or any other organization, you need to first determine what you are looking for. What are your needs? Does that organization fulfill that need? Who are the other members? What are the demographics of your potential market? Are the Chamber members your potential market? Is it worth 1/3 of your day to attend a meeting?

I think of my day as split in thirds – morning, afternoon, evening. And I think of a couple hour meeting plus getting out of my jeans and dressing for the meeting and getting there and back as using up 1/3 of my day.

Call the organization and see what its guest policy is so that you may attend at least one meeting before plopping down a big membership fee.

Please, do get back to me on using Quicken for your indie business.

Best,
June

Quicken or Quickbooks

June –

I noticed your book entitled Four Steps. I am wondering if the Quicken tweaks you write about in this book will suffice for my business? I am a consultant that builds eLearning and Web Applications. Well...to be accurate, I don't really build them...I work with the client, conceptualize them and then outsource all of the programming and sometimes graphics work to others (usually in India).

I work in a very project based manner. I setup a budget for each project that is based upon an estimate. I would like to be able to keep track of money going out and coming in based upon each project. I have recently installed the 300 buck version of Quickbooks and now, after seeing your book, I am wondering if Quicken will be able to do everything that Quickbooks can? I guess, to sum up my question, I am asking when you would recommend Quickbooks over Quicken and vice versa? Thank you for you insights and wisdom, I look forward to reading you book (SELF-EMPLOYED TAX SOLUTIONS)


Hi Dan,

I recommend Quicken [Q] over Quickbooks [QB] . It's easier.QB is a double-entry bookkeeping system. Accountants love it. Just plain folks find it overkill. The time you save with Q over QB will be well worth the money lost on your QB purchase.

Q has categories and subcategories and classes. The classes will allow you to separate expenses by project. Because you're computer-savvy I'll do a couple of shortcuts here. If you don't understand let me know.
For instance, take a look at this:

Supplies:Software/Project A
Supplies:Ink&Toner/General
Supplies:Software/Project B
Publications/Project B

Get the idea?

Q has a lot of bells and whistles. It allows you to set up budgets so you could compare budget to actual. I don't go into that in Four Steps. Four Steps is a basic how-to – how to make Q work for a self-employed business rather than for a family with wage earners or a small business that makes widgets.

Hope that helps.
June Walker

yeah, June, that makes sense. Now...there are a variety of Q versions. Do you recommend one over the other. Because I make widgets would you recommend the premium version or does it really not matter? With regard to project based budgeting...Q used to have a very useful Budget heads up display sort of thing that you could pull up and allow to sit on top of all Q windows. The display would show you by color (green, yellow and red) and progress bar how much you had left in your budget for a wide variety of categories. I made use of this a lot in Q ’98, I believe. Does the latest version of Q have this?

Do you know what I'm referring to?

-- Dan