I recommend checking with your client’s tax accountant because of the complexities around high value assets and costly damages. When we pay for the repairs: DR CR Asset/Bldg Cash How do I book these transactions?įor the damage: DR CR Damage/Exp Asset/Bldgįor the Insurance Check DR CR Cash Damage/Exp The owner received a check from the insurance company. I am doing the books for a small property management co. Here are some common types of insurance that are recommended for a business depending on the type of business they operate.Īll of these have the same insurance journal entry:ĭebit: Cash/Bank ( asset account) Credit : Repairs & maintenance ( expense account ) Question 2 The annual payment is usually cheaper than the total of the monthly payments as an incentive to pay the bill up-front, but small businesses often can’t afford this, so the providers offer the monthly option. This annual fee can be paid with a one-off payment or it can be spread over 12 monthly payments, or sometimes fortnightly. The insurance provider charges an annual fee, called a premium, which will cover the business for 12 months. Insurance Expense Journal EntryĪn insurance expense occurs after a small business signs up with an insurance provider to receive protection cover. *A deductible expense is one that can be included in your income tax calculations. Plus, there are questions I received from real bookkeepers/business owners who needed to know how to enter their insurance proceeds from property damage to which you can read my answers. There are various types of insurance cover available to small businesses and business owners so we'll have a look at those and how best to treat them in the accounts.
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