How to track iTunes transactions as business expenses?

Question

I have some business expenses that go through iTunes. I want to include certain business expenses in iTunes with my overall business expenses report created in my financial software (Quicken). The problem is that there isn't a way to pull iTunes transactions into your financial software, like you can with credit cards. I have a lump sum of money in iTunes so it doesn't run across a credit card per transaction.

To get around this, I've created an iTunes account in the financial software and manually enter in the specific business expenses. Now these transactions are included in business expense reports.

This creates a new problem. How do I pay for expenses in this phantom iTunes account?

I thought of creating a "miscellaneous" payment in iTunes. It's money out of thin air to offset the expense. Otherwise, for the business, they will be expenses that continually grow and never get paid since the miscellaneous payment doesn't come from anywhere and isn't tracked as a business transaction.

Anyone have a suggestion on how I can offset this business expense in the phantom iTunes account? Or a completely different solution?

Answer 1

It's money out of thin air to offset the expense.

It's not coming out of thin air. The money to pay for the iTunes transactions is coming from the "lump sum" in your iTunes account. The current amount of this "lump sum" should be listed as an asset. If you put more money into this "lump sum" amount, you should record that as a debit to wherever the money comes from and a credit to your iTunes account. When you make an iTunes transaction, you should record that as a debit to your iTunes account and a credit to wherever your money went to in iTunes. If this doesn't answer your question, then you should make your question clearer, because I'm not sure what the issue is.

EDIT: You've commented that you are paying for business expenses out of a personal iTunes account. Best practices would be to have a separate iTunes account for business expenses. As it is now, you're paying for business expenses with a personal account, and your confusion as to how to do the accounting is a manifestation of this mixing of funds. The reason there's money coming out of "thin air" is that your personal money is bleeding into your business without proper accounting.

If you insist on having only one iTunes account, you should at the very least create a "virtual" account. Every time you pay for a business expense with your iTunes account, debit this virtual account. This will of course accrue an increasingly large negative balance. This represents the fact that every payment you make from your personal iTunes account to pay for a business expense creates a debt that your business owes to you as a person. One way to handle this would be to put money into your actual iTunes account from a business account, debit that account, and credit your virtual business iTunes account. By doing this, your business is paying you as a person back, and so the debt (represented by the negative balance of your virtual iTunes account) decreases.

Depending on the structure of your business, you may be able to create an "owner equity contribution" account. You as a person can put money into that account, either by "forgiving" the debt that your business owes the actual iTunes account, or by putting money into your actual iTunes account from your personal fund and recording it as a deposit into your virtual iTunes account. Both of these actions amount to you explicitly investing your personal money into the business, and should be treated a equity contributions. Again, this does depend on the structure of your business, so you'll have to look at what rules on equity contributions apply to your particular case.