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Started By
Message
Anyone ever considered using QBO for personal financial tracking?
Posted on 4/10/21 at 7:13 am
Posted on 4/10/21 at 7:13 am
QBO has got to be one of the most user-friendly cloud apps I’ve ever used and is such a valuable tool for business.
I’m considering using it for personal income / budget / net worth tracking and think it could hypercharge efforts to grow net worth. Simply put, if I had the same focus on my personal financial position as I do on my business’ financial position, there’s no doubt I’d be a more effective manager of, well, myself. Effectively, you’d be treating yourself like an actual business and I think make efforts to save and invest more “tangible” by reviewing the results every month just like you would for a business.
Has anyone gone this route themselves?
I’m considering using it for personal income / budget / net worth tracking and think it could hypercharge efforts to grow net worth. Simply put, if I had the same focus on my personal financial position as I do on my business’ financial position, there’s no doubt I’d be a more effective manager of, well, myself. Effectively, you’d be treating yourself like an actual business and I think make efforts to save and invest more “tangible” by reviewing the results every month just like you would for a business.
Has anyone gone this route themselves?
This post was edited on 4/10/21 at 7:14 am
5
Posted on 4/11/21 at 11:17 am to RedStickBR
Been using it for about 7 years..Awesome
Posted on 4/11/21 at 11:21 am to RedStickBR
Yeah, that would definitely work. Just have to take the time to set everything up and then classify the transactions.
Posted on 4/11/21 at 2:03 pm to RedStickBR
Could be worth it if you have various investments and income streams. My shite is way too basic for all that, though.
Posted on 4/11/21 at 7:08 pm to RedStickBR
I just saw an interesting ad for something called Monarch. May be something to look into...
Posted on 4/11/21 at 9:39 pm to southernelite
Thanks, I’ll look into it.
Posted on 4/11/21 at 10:02 pm to RedStickBR
Have a few clients that use QBO for personal.
It’s nice in feb when they can print me a list of various deductions...
It’s nice in feb when they can print me a list of various deductions...
Posted on 4/12/21 at 8:10 am to LSUFanHouston
Didn’t even think of that. Do you require receipts or is the link to checking/saving/CC accounts enough for you?
Posted on 4/12/21 at 9:56 am to RedStickBR
quote:
Didn’t even think of that. Do you require receipts or is the link to checking/saving/CC accounts enough for you?
Depends upon client history / amounts involved.
We tell all our clients if the IRS decides to ask questions, you have to be able to substantiate charitable deductions of $250 or more, and any other business type expense of $75 or more. Ultimately it's the client's responsibility to keep track of these.
I have no desire to see 468 pages of prescription drug receipts, for example.
If a client understands this, if they have a good system, and if they have a history of expenses in a similar range, we will usually accept reports.
CPAs preparing tax returns are under no obligation to "audit" our clients tax information. If something seems unreasonable (for example, a client making $27K a year with no investments or inheritance, claiming a $45,000 charitable donation) we will ask more about it, and if they insist and can't support it, we usually decline to continue their work.
Posted on 8/8/21 at 9:21 pm to LSUFanHouston
Finally went through with this. I couldn’t be happier with the decision. I looked at half a dozen other options (YNAB, Personal Capital, etc.), but none had the functionality I wanted. But QBO nails it once you put in the initial work to set everything up.
In terms of net worth tracking, I plan on updating all my investment accounts once per month. How would you CPA pros recommend I account for month to month changes in my investment accounts? For example, Investment Account A goes from $100 to $150 over the course of a month. In terms of adding the extra $50 to my balance sheet, I was thinking of this journal entry:
Credit: Other Income > Other Miscellaneous Income > New Account Called “Investment Gains/Losses” (And this would encompass both actual gains/losses and new contributions from, say, my employer)
And then Debit the relevant investment account
FWIW, I don’t plan on using this for tax purposes, except for one expense line item for charitable contributions, so I don’t mind if this approach technically shows more “income” than a tax return would show.
In terms of net worth tracking, I plan on updating all my investment accounts once per month. How would you CPA pros recommend I account for month to month changes in my investment accounts? For example, Investment Account A goes from $100 to $150 over the course of a month. In terms of adding the extra $50 to my balance sheet, I was thinking of this journal entry:
Credit: Other Income > Other Miscellaneous Income > New Account Called “Investment Gains/Losses” (And this would encompass both actual gains/losses and new contributions from, say, my employer)
And then Debit the relevant investment account
FWIW, I don’t plan on using this for tax purposes, except for one expense line item for charitable contributions, so I don’t mind if this approach technically shows more “income” than a tax return would show.
Posted on 8/9/21 at 6:20 pm to RedStickBR
Shameless bump to see if the CPA MTers have any feedback on the above 
Posted on 8/9/21 at 7:42 pm to RedStickBR
You could do it like that, or you could have set up one equity account for contributions and one equity account for unrealized and then only take your realized gains to P&L. They’ll prepare the tax return off of the 1099 anyway, so it’s really your call as to what makes the most sense to you accounting wise.
This post was edited on 8/9/21 at 7:43 pm
Posted on 8/9/21 at 8:26 pm to southernelite
Thank you, sir. I like that approach from a pure accuracy of accounting standpoint, but it would also add an extra step and require more data gathering each month. If it were my business, I’d definitely do it that way, but for personal net worth purposes, I feel simplicity will help me be more diligent about tracking everything. I’m going to consider it.
One additional question. One purpose for my “income statement” is to accurately track cash in and out each month. I perform a split each month on my mortgage payment, with “x” going to interest, “y” going to escrow (prop tax and insurance), and “z” going to principal. Obviously, “z” doesn’t hit the income statement but does hit the cash flow statement. However, for these purposes, the income statement is what’s important as it breaks out expenses by line item and shows total net take home pay as “revenue.” Cash flow statement doesn’t do me much good in this personal context.
Any creative ideas around nonetheless getting “z” to show on my income statement? Of course, I could intentionally misclassify the entire P&I portion as I, but then the P reduction wouldn’t automatically flow through to my balance sheet.
One additional question. One purpose for my “income statement” is to accurately track cash in and out each month. I perform a split each month on my mortgage payment, with “x” going to interest, “y” going to escrow (prop tax and insurance), and “z” going to principal. Obviously, “z” doesn’t hit the income statement but does hit the cash flow statement. However, for these purposes, the income statement is what’s important as it breaks out expenses by line item and shows total net take home pay as “revenue.” Cash flow statement doesn’t do me much good in this personal context.
Any creative ideas around nonetheless getting “z” to show on my income statement? Of course, I could intentionally misclassify the entire P&I portion as I, but then the P reduction wouldn’t automatically flow through to my balance sheet.
Posted on 8/9/21 at 8:45 pm to RedStickBR
You could take the reduction to the liability straight to RE and then take your principal payment to the P&L to offset.
Posted on 8/9/21 at 10:10 pm to southernelite
So, what would those credits and debits be for my journal entry? Or is there a way to do it within the split itself without having to make a JE?
I really appreciate the help!
I really appreciate the help!
Posted on 8/10/21 at 10:55 am to RedStickBR
So here is what we do for our clients that want a FMV personal financials. This may be a little overkill for what you want... so modify as necessary.
Each investment account in QBO has a cash account (bank asset) and a investment account (other asset).
Record the cash transactions monthly (interest and dividends rec'd, fees paid, cash in and out, etc that hit your cash balance). Reconcile. Note this includes money market type accounts.
If you have dividends reinvested, you would record that to your investment account.
Record purchases from cash account to investment account. Record sales from investment account to cash account and realized gain/loss account.
Your last thing is then the unrealized gain/loss. We record this as an additional equity account called, easily enough, unrealized gain/loss. It is essentially a plug that is needed to have the investment account reported at fair market value. So after all the other activity is recorded to the investment account, you would adjust this account amount by hitting this unrealized gain/loss account. This is a balance sheet account.
You end up with the balance sheet asset accounts at FMV, only recognized income on the profit and loss, and a correct FMV bet equity.
Each investment account in QBO has a cash account (bank asset) and a investment account (other asset).
Record the cash transactions monthly (interest and dividends rec'd, fees paid, cash in and out, etc that hit your cash balance). Reconcile. Note this includes money market type accounts.
If you have dividends reinvested, you would record that to your investment account.
Record purchases from cash account to investment account. Record sales from investment account to cash account and realized gain/loss account.
Your last thing is then the unrealized gain/loss. We record this as an additional equity account called, easily enough, unrealized gain/loss. It is essentially a plug that is needed to have the investment account reported at fair market value. So after all the other activity is recorded to the investment account, you would adjust this account amount by hitting this unrealized gain/loss account. This is a balance sheet account.
You end up with the balance sheet asset accounts at FMV, only recognized income on the profit and loss, and a correct FMV bet equity.
Posted on 8/10/21 at 11:00 am to RedStickBR
quote:
So, what would those credits and debits be for my journal entry? Or is there a way to do it within the split itself without having to make a JE?
What you really want is a cash receipts and disbursements statement instead of a profit and loss.
But you also want a correct balance sheet, and you don't want to use a statement of cash flows.
OK.
I would record the payment to an expense account I'd call "mortgage payments".
I'd then do a journal entry for the principal portion of the payment, Debit the liability balance on the balance sheet, credit retained earnings or some other equity account (perhaps you make one called mortgage principal payments or something).
If you wanted to show on your cash disbursements / receipts a breakout of interest expense / escrow, you can do that when you record the original transaction.
Posted on 8/10/21 at 11:24 am to LSUFanHouston
quote:
I would record the payment to an expense account I'd call "mortgage payments".
I'd then do a journal entry for the principal portion of the payment, Debit the liability balance on the balance sheet, credit retained earnings or some other equity account (perhaps you make one called mortgage principal payments or something).
Thank you! I'm thinking this will do the trick. Initial entry:
1. Split Expense - Interest Expense, Escrow Expense and Principal "Expense"
2. JE - Debit Liability on BS, Credit RE
#1 would have all three "expenses" hit the I.S.
#2 would then bring RE back into balance (I think)
Posted on 8/10/21 at 11:26 am to LSUFanHouston
quote:
So here is what we do for our clients that want a FMV personal financials. This may be a little overkill for what you want... so modify as necessary.
Each investment account in QBO has a cash account (bank asset) and a investment account (other asset).
Record the cash transactions monthly (interest and dividends rec'd, fees paid, cash in and out, etc that hit your cash balance). Reconcile. Note this includes money market type accounts.
If you have dividends reinvested, you would record that to your investment account.
Record purchases from cash account to investment account. Record sales from investment account to cash account and realized gain/loss account.
Your last thing is then the unrealized gain/loss. We record this as an additional equity account called, easily enough, unrealized gain/loss. It is essentially a plug that is needed to have the investment account reported at fair market value. So after all the other activity is recorded to the investment account, you would adjust this account amount by hitting this unrealized gain/loss account. This is a balance sheet account.
You end up with the balance sheet asset accounts at FMV, only recognized income on the profit and loss, and a correct FMV bet equity.
Thanks for this as well. I think I'm just going to use the single "Investment Gains/Losses" Other Income account as my credit and then debit the relevant assets on the balance sheet.
I don't need all of the fine detail for tax accounting purposes. This is just to show cash in/out and net worth.
Posted on 8/10/21 at 11:28 am to RedStickBR
quote:
#2 would then bring RE back into balance (I think)
It will on a sum basis. Your "net income" number that automatically shows up on your balance sheet will be lower than it should be... but the adjustment to retained earnings in entry two will offset that on a total retained earnings basis.
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