Ho wdo I escrow money for taxes
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How do I escrow money for taxes and then how do I pay taxes out of that money so I do not show a huge loss for that month?
Answer
Open a separate bank account for your taxes. Then in your QB's, set up 2 new general ledger accounts. One account will be your new bank account and the other account will be an equity account for the type and the name could be Taxes for 2009. As you deposit money in to the bank account, you will record the deposit to the equity account, Taxes for 2009. Anytime you look at the Chart of Accounts, you will always know how much you have paid in taxes for that given year. I would do the same for 2010. Set up a new general ledger account and call it Taxes for 2010. Do the same as in 2009. This will not affect the Profit and Loss statement at all, only the Balance Sheet.
