Entering a car lease in Quick books

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@566607 wrote:

First, I feel it is very frustrating that nowhere on the internet explains how to enter a car lease in Quick book ...and I mean a step by step instruction. I am in Ontario Canada.

I have a car lease from Honda. The lease is for 3.5 years at which time I can walk away from the lease or buy it out.  After an exhausting search...I think this is an operating lease.  Is it?

Could someone please let me know what I need to enter in the chart of accounts.

I do not pay expense directly out of my business account. I pay them from my personal account and make a General Ledger adjustment at the end of each month.

I am guessing that I could create an Expense account (need instruction what I do when I hit continue). and the create a Vehicle lease account as a sub account(again what do I put when I click continue)

Then I can just write a cheques payable to the Honda company and put that towards the Vehicle lease with the HST.

Please help as there is no help anywhere online and I'm not reinventing the wheel here.

Thank you

Mike

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According to my interpretation, since you have a predesignated purchase option this is a capital lease not operating. This means both the vehicle as an asset and the lease as a liability must be on your balance sheet according to rules enacted 1/1/19 https://quickbooks.intuit.com/ca/resources/taxes/how-operating-differs-from-capital-lease/ 

    http://www.mondaq.com/canada/x/734892/leasing/IFRS+16+Changes+that+Impact+Borrower

s+and+Lenders+are+Coming+to+Canada+Are+you+Ready

The advice in the Intuit article "It’s a good idea to consult your accountant about how IFRS 16 impacts your business and personal financial pictures" is good advice - you need to spend a few Loonies to get it right (I do not think QB knows how)

Payment from personal funds is simply equity contribution to the business.

You have already learned that the first question in lease accounting is the Operating vs Capital question.  If the ownership papers show the name of the leasing co, and you actually think that walking away from the vehicle at the end of the lease is a viable option - then it is probably an Operating lease.  Lets assume so.

After that you already know what to do - create an item and/or an account for the vehicle lease expense. Then record the payments as disbursements to this account (or item) making sure you use the right tax code. Your code will probably be HST.

To create an account - do so from the Chart of accounts > the functions are at the bottom.

To create an Item - do so from the Item List > functions at the bottom. The item should point to auto expenses or a separate lease account.

Hi, 

first of all you have to know that what you are doing in your QuickBooks is something, and what your tax accountant would do when he or she files your tax return as something else.

we can start chatting about capital versus operating leases for many hours and never end, it is a long complex subject.

There are ASPE rules, IFRS rules, and Taxation rules.

You are a sole proprietor. so you do not do reporting under ASPE, and not under international rules ASPE. Also, your tax accountant is supposed to Capitalize the lease for you in your return. 

making the story short. For Compilation Engagement (Notice to reader) purposes, you can show it as an operating lease. As the NTR ( if you issue it in the first place) doesnt not report under any ASPE or IFRS. 

I would say just keep posting your transactions normally and your tax accountant do any needed work in the tax return ( in the software). 

for the personal payment and adjustments, make sure you are doing it right. 

 And make sure you take into consideration the personal use of the vehicle. Have a mileage book, and make YEARLY adjustments.