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    4 Replies Latest reply on Aug 2, 2014 11:20 PM by cpajoe

    Assets purchased before opening my business

    mark a Newbie

      I have a Web Development business, all online.  I opened it as a "Sole Proprietor" and I use the "Cash Method".

       

      Assets:

      1. Digital Camera
      2. Lens 1
      3. Lens 2

      Cash in $1500

      Fictitious Name fee $42

      Accounting Software #155.19.

       

      My question is: 

       

      I want to know how to record my assets, cash in, registration of name and software.  My goal is to pay myself back with the least amount of a tax burden whether it be this year of next. 

       

      I'm using Quickbooks 2014.  There are three accounts to choose from, they are as follows:

      1. Opening Balance Equity
      2. Owner's Draw
      3. Owners Equity

      I know what the "Owners Draw" is.  "Owner's Equity" is a retained earnings account, can't post anything there.  I'm not sure what "Opening Balance Equity" is and don't really think it is part of my solution. 

       

      My guess is to record the transaction in an equity account and then debit the expense.  Or debit a liability account and pay myself through a loan.  If I record the transaction in an equity account which one should I use?  Should I also use a sub-account, so I can itemize these transactions?  Or do I use fixed assets?

       

      Please don't suggest for me to get an accountant, I understand that is an option.

       

      Thanks very much any responses,

      Mark A.

        • Re: Assets purchased before opening my business
          Ranger

          Hello! And Welcome to the Community !

           

          You pose some valid questions about being a small business owner . I know the community will help you out with them so keep in touch!

          In the mean time , here are some discussions past about Quick Books you might want to read : QUICK BOOKS ,Bookkeeping services online? How does this benefit small business owners? ,What's the best accounting software? Cloud vrs non cloud? ,Who here uses QuickBooks?

           

          I look forward to hearing more from you in the community and again , Welcome

           

          Joleen

          • Re: Assets purchased before opening my business
            Uncle Leon Tracker

            Hi, Mark,

             

            I could tell you my opinion; but that doesn't matter.  Ya see....I'm not an accountant, and I don't play one on TV.

             

            But after being in business over 30 years, and with continuing small business investments; I strongly advise ANYONE starting a business to get an accountant from the beginning.  I feel this so strongly that my advice is ALWAYS:    If you can't (or won't) afford a professional accountant; Stay home.

            • Re: Assets purchased before opening my business
              hconnections Adventurer

              Hi Mark,

               

              Congratulations on starting your new business. I help small business owners like you all over the U.S. to keep more of what they make. I have been a tax professional for 20 years and what I can tell you is that running your business as a Sole Proprietorship (like all business types) has advantages and disadvantages. But being taxed as a Sole Proprietorship will cause your taxes to be higher for Social Security and Medicare taxes. In most cases, people find themselves better off forming their business as an LLC or Corp and in either case, then "converting to an S Corp" can save you money.

               

              You definitely need to do more research on the pros and cons of each business type and determining which one suits your needs. This is a big reason why I created The Home Business and Small Business Tax Toolkit found at http://www.smallbusinessstartupconsultant.com

               

              I hope you found this information useful and best of luck to you.

               

              Ktasha Hardge

              Small Business Tax Specialist | Small Business Start-up Coach | Small Business Development Consultant

              www.smallbusinessstartupconsultant.com

              • Re: Assets purchased before opening my business
                cpajoe Scout

                Mark, I'm a certified public accountant and a quickbooks professional advisor.

                I would say to look at the cash, fixed assets and office expense accounts to post the amounts you mentioned, with an offset to a loan payable to you.

                Now that you are started, I suggest you review the accounting software's help area to get familiar with the program to see what to do the next time you have a transaction to record.