Transferring money between budget categories
When you need to transfer funds between budget categories, so they show on reports as an expense in one category and income in another, without any real money moving. This is how it should be recorded.
An example might be if someone traded a service, say lawn mowing, for their member dues. You would want the expense to show under lawn mowing and the income to show under member dues, even though no money is actually changing hands.
Let’s take a look.
Notice that in this withdrawal, a positive number is entered for lawn mowing and a negative number is entered for Member dues. The net amount of the transaction is $0.00, which is accurate since no “real” money is changing hands.
Let’s see what this looks like on the Treasurer’s Report.
You see that $50.00 in expenses has been recorded in the Lawn mowing category.
And $50.00 in income has been recorded in the Member dues category.
Note: This will overstate both income & expenses and is important to remember when filling out the 990 or 990EZ.
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Connect your Bank, Square and PayPal accounts to MoneyMinder PRO to directly download transactions, saving you time and effort. You just review the transactions to ensure they are properly categorized and fill out any required fields.
So is this setting up a faux $0 transaction in the bank account register?
I had thought about setting up a “Clearing Account” for just this sort of category-to-category transfer, where every transaction would be a net $0 transaction, so I could keep these non-bank transactions out of the bank check register.
Hi Roger,
Yes, this type of transaction would be recorded in the bank register. You can set up a “Clearing Account” to keep them separate if you’d like. Keep in mind, that these transactions will inflate both income and expenses.
I need to do exactly what the example shows but when I ‘add a split’ how do a denote a withdrawal (negative amount) from one category and a deposit (positive amount) in the other?
Hi Megan,
Great question. If you follow the example in the knowledge base link, the negative portion of the split is the budget category that you are moving funds into.
Don’t hesitate to reach out if we can help.
Warm regards,
Julie