Tracking a business

If you run something on the side — or something that is not on the side — SageFin can keep its books alongside your personal money without mixing the two.

The whole feature rests on one idea worth getting straight first.

Tax lines are not categories

Your categories are for you: groceries, dining, transport. They drive your budgets and your reports, and you can invent as many as you like.

Your tax lines are for your accountant. They are Schedule C–shaped — advertising, supplies, contract labor — and the built-in ones are fixed, because the point of them is that somebody else recognizes the names.

A business transaction gets both: a category, because it is still spending, and a tax line, because it is going in the books. The same coffee is Dining to you and Meals to your return.

Adding your own

Schedule C line 27a, Other expenses, is the one line the form wants itemized: Part V asks for each of those expenses by name. So you can add tax lines of your own in Settings → Businesses, under Tax lines — Software subscriptions, Bank fees, Education — each reporting on the Schedule C line you choose, which for an expense starts at 27a. Business tax prep then lists them in Part V, one row each.

Anything still on the built-in Other expenses line shows in Part V as not itemized, because it has no description to give. Move those transactions onto a line of your own to name them.

A few things are fixed on purpose:

• The built-in lines cannot be changed. They are Schedule C's own, and they are the same for everybody.
• A line's kind — income or expense — is chosen once. Changing it would move every transaction on it between the two sides of your books at once; make a new line and move them instead.
• Lines are deactivated, not deleted. Deleting would leave every transaction on it with no tax line and nothing to say why. A deactivated line leaves the pickers and keeps reporting whatever is already on it.
• Changing which Schedule C line a line reports on changes every period, past years included — which is what you want when you are correcting a mistake. The CSV you exported when you filed is the record of what you filed.

Assigning transactions

Mark a transaction as belonging to a business, and give it a tax line. An account can also have a default business, so everything arriving in a dedicated business account is assigned without you touching it — which is the reason to have a separate account for it if you can.

What lands in the profit and loss

Cash basis: money that actually moved in the period, not invoices raised.

A transaction is in the P&L when it is assigned to the business, dated in the range, and carries a tax line of the income or expense kind.

What is deliberately left out

Three tax lines exist precisely to keep things out of the P&L, and knowing why saves an argument with your accountant:

• Owner draw — money you took out of the business. That is equity moving, not an expense. Counting it would understate your profit and your tax.
• Transfer — moving money between your own accounts is neither income nor spending, however much it looks like both.
• Personal — something that stays attached to the business for your filtering, and stays out of the books.

And one thing is left out by accident rather than design. A transaction assigned to the business with no tax line is not in the P&L, because SageFin will not guess which line it belongs on. It is not lost — it appears in the accountant pack's Excluded section, which is where you find the work still to do.

That is the single most useful habit here: run the export, read the Excluded section, and code what is sitting in it.

What your accountant receives

The accountant pack is a CSV in three parts:

1. A profit and loss summary by tax line — income, expenses, totals.
2. The detail behind it — every booked line with its date, payee, amount, account, tax line, Schedule C line and memo.
3. The excluded section — the owner draws, transfers and personal items, plus anything still uncoded.

The third part is not padding. An accountant who can see what you excluded and why does not have to ask, and the uncoded rows are the conversation you were going to have anyway.

There is no PDF. Hand over the CSV.

What this is not

It is not bookkeeping software, and it does not pretend to be. There are no invoices, no accounts receivable, no double entry. It is a clean cash-basis picture of a business's money drawn from accounts you already have connected, which is enough for a great many small businesses and is not enough for all of them.

It is not tax advice. The tax lines are shaped like Schedule C because that is a shape accountants recognize. Which line something belongs on is a question for the person who signs the return.