Business Questions

[Conrad Canterford]

On Sat, 2002-12-14 at 10:45, Carl Parrish wrote:
> For instance since I'm trying to track four companies
> should I set up seperate AP/AR for each company? Can I share Vendors
> across Companies? Sometimes I have to Invoice a Client from two
> different companies. Should I just create separe invoices? If you were
> tracking business expenses would you create separte accounts for each
> company? Is there a good reason why phone and cable aren't listed as
> utilities? For company utilities would you list them as vendors or
> simply set up new accounts for them?

Carl,
A lot of how you answer these questions depends on your specific
requirements and what you'd like to achieve.

You have three alternatives that I can see:
1. You could set up completely independent accounts for each entity - by
this I mean you'd have files: accounts-coy1, accounts-coy2, etc. This
would keep them all independent and would give you very good details on
what each companys figures are, but has the disadvantage that the files
won't interact with each other, and you can't share anything between
them. Gnucash is not set up to deal with this sort of thing, although it
may happen in the future.

2. You could set up one gnucash file, but duplicate the account
structure within it. So, you'd have: Assets:Bank_accounts:Coy1, and
Assets:Bank_accounts:Coy2, etc; and: Income: Coy1, Income:Coy2, etc.
There are actually two approaches within this. The way I do it (I have
one company with 3 divisions) is as I describe above - 1 Assets top
level account, and then the divisions have their own sub-accounts. The
other alternative (which will give a better picture of things, in my
mind) would be to have seperate Asset, Liability, Expense, Income, and
Equity top level accounts for each company. Both work much the same way,
it just a matter of how its structured.
Using this approach, you can share Vendors, Customers, etc between the
companies (as far as gnucash is concerned, there is only one set of
books, and the companies are just an organisation you've applied to the
accounts). The disadvantage is that it is very easy to "cross-over" by
accident - Income:Coy1 gets deposited to Bank_Account:Coy2 due to
clicking the wrong account in a moment of brain-fade. Chasing these
sorts of mistakes can be a real pain (trust me... ). However, if you're
careful, this approach works very well in my experience.

3. You could just have one consolidated set of accounts, and not
diferentiate between the companies at all. This has the advantage of
simplicity, but that is also its disadvantage - you cannot (easily)
differentiate between the different companies, and if that is important
to you or is possibly going to be important in the future (for tax or
other reasons), I'd strongly advise against it.

There is a fourth alternative, really - a combination of 2 and 3, which
is how my accounts work. I have common bank accounts between bits, and
some shared expenses. Since I have only one top level account in each
class, I can mix and match these quite easily and it all works.

Now, to some of your specific questions:
Invoicing one client between two companies - I'd strongly recommend two
invoices if you really do run them as separate entities. Keeps the two
seperate in the customers mind, and makes allocating the payments to the
different entities much easier (since the customer pays the invoice for
each entity seperately).

A/R and A/P - much the same answer as with invoices really. If they're
seperate entities, keep them seperate in the accounts.

Phone and Cable - They're just sample accounts, and whoever set them up
for some reason didn't categorise them that way. You'd be best checking
with your accountant to see in which way they classify them, and then
follow that (saves on confusion later).

Vendors for company utilities - Strictly speaking, most of the time
these are actually accounts payable and should probably be treated as
such, but the proviso on that is that it really depends on how your
accounts are done (there are tax implications, in Australia at least).
Check with your accountant.

Hope that helps. Its long and detailed, hope it all makes sense. Feel
free to ask further questions on gnucash-user if you need to.

Conrad.