Best way to adjust Tax Accounting without mixing personal expenses?

Here in Mexico, personal expenses are tax deductible. For various reasons, I do not want to mix my personal expenses with my business account to register personal tax deductible transactions. Can you please help me figure it out the best way to adjust my taxes?

For example:

Say my Tax Payable Account (in Manager) is $100.00 MXN, but I had enought personal expenses to deduct $20.00 MXN, so actually, my real Tax Payable Account is $80.00 MXN. What’s the best way to adjust this without a drawn from my Owner’s Capital account?

Thank you very much in advance.

Have you read this Guide? Does it help you do what you need?

You were not clear about exactly which expenses were tax deductible. It seemed strange that personal expenses would be, in general.

Im posting this Precisely because I already read that file. As odd at it seems, I would like to know if there is a simpler way to do it.

Thank again!

I figure it out one way. Please let me know your thoughts.

  1. I created a cash account named TAX DEDUCTIBLE
  2. From there I record as income the difference between what says ($12.00) and what I really have to pay ($8.00).
  3. I pay $8.00 normally and the rest ($4.00) I pay it from my TAX DEDUCTIBLE account and I record the payment. (see image 2)

Any thoughts?

First, cash accounts should be created only for actual accounts owned by the business, whether they are bank accounts, credit cards, PayPal, petty cash, or other accounts into which and from which money can be deposited or withdrawn. No account owned by an individual separate from the business should be include. You did not make clear what the cash account TAX DEDUCTIBLE actually was, but it does not seem to fit these requirements.

You should only record in cash accounts actual amounts paid or received.

I am still wondering why any personal expense is deductible by the business. You need to further describe the situation and the original transaction(s) involved.

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In that case you need to have two Manager businesses so they (business / private) can be recorded separately. Then you transfer the private taxes factor into the business accounts.

You can’t, any private factor being incorporated into the business must have an impact on the Equity - owner’s capital accounts.

AS stated above, it is totally inappropriate to create artificial cash accounts.

Yes, process those related private expenses within the business accounts in an accurate form but that means that they “must” have a capital account component.

First of all, Thank you very much for your answers (Tut and Brucanna). At last I did it exactly like you told me (Created a Private Expenses) from Capital. It adjust perfectly to my needs.

very very thankful!!

The existing Drawings account would have sufficed, unless you have a particular need to record separately.