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Columns by June Walker: IPs Face Unique Tax Challenges Tax Deductions Are There For The Taking You Say You're Self-Employed -- Will the IRS? Criteria for Self-Employment Do You Have a Business or a Hobby? Proving That You're a Business Keeping Records -- It's Not Just for Taxes Three Ways to Expand Your Business Deductions Can I Deduct Disneyland and Other Questions Mixing Business with Pleasure and Other Gray Areas Quicken for IPs Courses That Qualify Training You Can't Deduct Getting There is Half the Battle Taking Deductions on the Road Getting Credit and Taking Allowances Advertising: Do It, Then Deduct It The Subtle Art of Advertising Deductions Billy Bridesnapper's Start-up Saga Starting Up and Shutting Down Start-Up Wrap-Up Giving Gifts, Taking Deductions

Quicken for IPs Quicken is the software program of choice for most of my IP clients who keep track of their business finances on a computer. (If you're not a Quicken user or about to become one, then much of the terminology of this piece will have little meaning for you. So save it until you decide to move on to Quicken -- a move I recommend.) Accountants call a list of business expenses a chart of accounts. Quicken calls it a category list. I'll show you how to fit self-employed income and expenses into the Quicken format. Many IPs jump into the program assuming that Quicken has supplied the user with an all-purpose category list that will automatically apply to their own business. (Why an IP private investigator would think he has the same kind of expenses as a numerologist puzzles me.) Actually the Quicken category list doesn't fit most IPs. It has categories like bonus and salary. It also has a miscellaneous category that you should delete and never use, because too much gets thrown in there by people who don't want to think about where an item really fits. So at the start, before you enter one item in Quicken: Do not use the categories that Quicken provides. Delete them all. Set up your own categories based on the list below. The goal is to call your categories by whatever name makes the most sense to you. If you think of dining out with a business associate as "meetings out," then that's what you should name the category. If you think of dining out with the family as "eating out," then that's what you should name that category. Use lots of sub-categories. They can always be combined later. For example: if you have two vehicles and one is used exclusively for business and the other only 10 percent for business, at tax time you'll need to be able to separate the costs related to each vehicle. The indentations in the list below indicate sub-categories and even sub-sub-categories. Examples of Quicken Categories for Self-Employed People Income or Inflow Categories Category Name Possible Meaning (& Notes) Al's Net Pay husband's pay check Ann's Business Income       Consultations           Alice Alliance customer #1         Bob Breakpart customer #2     Seminars           Mandatory Arbitration topic A         Compromising Basics topic B Gifts       Mom birthday present     Uncle Joe Christmas gift Investment Income       Dividends           Intuit       Interest           1st National Bank   Investment Sold       J&J   Social Security   TBA -- In to be allocated; need more info; didn't have enough information at time of Quicken input to categorize the item X Change -- In       Adjustment       Federal Tax Refund       Medical -- Reimbursement           Doctors           Insurance       Loan from Sister       Expense or Outflow Categories Category Name Possible Meaning (& Notes) Accountant   Advertising   Assistants       Charlie name #1     Heidi name #2 Auto -- Any        Gas can't tell from the receipt which vehicle it applies to     License   Auto -- Ford       Gas       Insurance       Registration       Repairs   Auto -- Ford Loan Payments   Auto -- Lexus       Gas       Insurance   Auto -- Lexus Lease   Bank Charges -- Business       1st National       Safe Deposit Box   Beauty   Business Gift   Business Gift Excess spent more than $25 per gift Capital Improvements       House       Office or Studio   Cash   Contributions   Costumes -- Make-Up the tuxedo Credit Card Fees not finance charges Drugstore -- All   Dues -- Fees   Equipment       01-1 (Note: accountant may need to know in which half of the month the equipment was purchased)     02-1       02-2 bought after February 15th     03-1       09-2       Bookshelves (Note: some choose to categorize by kind of equipment)     Computer       Piano   Food -- Liquor       For the General Public   Food -- Liquor -- Entertainment       Meetings       Promotional       Recitals       Travel   Fun       Eating Out       Camping Equipment   Insurance -- Business       Liability           BBB Inc           CCC & Co       Malpractice   Interest Expense (Note: some call it finance charges)     Line of Credit Acct.       MasterCard       Visa 1111-0000-1111-2222   Investment Expense       Smith Barney Mgmt. Fee       Wall Street Journal   Kids       Camp       Lessons       Clothes       Jane the babysitter Life Insurance        Al        Ann        Ugh! ex-wife's life insurance policy Medical Insurance       AARP       Blue Cross   Medical Doctors, etc.       Feldman       Miller       Eyeglasses       Labs, etc.       Massage       Rx prescriptions Mortgage   Office or Studio-in-home       Insurance       Rent       Repairs       Utilities           Electric           Water   Personal       Clothes           Al           Ann       Clubs the gym     Gifts           Family           Friends       Groceries       Houseware -- Linens       Penalties -- Fines traffic tickets     Repairs --Tailor           Jewelry           Clothes       Vitamins   Postage -- Office Supplies   Printing -- Copies   Publications   Recording Costs   Rental Equipment   Rehearsal Studio   Repairs -- Maintenance       Equipment       Studio   Research -- Study       Cable TV       Performances       Seminar       Tapes -- CDs -- Videos   Supplies       Clinic       Recital       Studio   Taxes       Federal           1998           1999       Sales -- NMGRT       State           1998           1999   TBA -- Out to be allocated -- need more info Telephone       Business Line       Fax Line       Mixed Personal & Business   Transportation       Subway       Taxi   Travel       AZ       NY   Void   X Change -- Out   Adjustment   Friends cashed a check for a friend Loan to Jack $50 -- not a formal loan Repay Aunt Annie borrowed when out the other day You don't need to literally use this expense-category list in Quicken. Hopefully this will serve as a useful guide to help you set up your own expense-category list customized to your own circumstances.   (c) 2000 June Walker. All rights reserved. We'd love to hear your feedback about this column, or put you in touch with June Walker if you like. You may also like to see her biography.