Setting Up Sole Proprietorship Books

[Don Quixote de la Mancha]

On Thu, Dec 31, 2009 at 12:34 PM, Mike or Penny Novack
<stepbystepfarm at mtdata.com> wrote:
>
>> Does anyone have any advice for setting up sole proprietorship books?

> While you and the business file taxes together you don't do that on the same
> part of the 1040, right? You need figures for the business to fill out the
> schedule C and whether the business made or lost money a separate question
> whether you had income or not (other lines on the 1040 than where the grand
> total from the Schedule C goes). Would that be easier or harder with one set
> of books or two?

I can see that would be much easier with two separate GnuCash files.

A common problem would be that certain kinds of expenses could be
either personal or for the business, such as a meal in a restaurant.
If it's a business meal, it goes in the proprietorship's books, but I
also dine out without it having anything to do with the business.

Configuring the accounts with both in one file would be a real PITA.

> You say fairly frequent draws and "investments"? (negative draws)  Define
> fairly frequent? You do that daily? Or is it the case that in fact these
> transactions represent just a very tiny fraction of all transactions either
> for yourself or for the business? In other words, would it really be that
> hard to enter in two sets of books draws/puts that are weekly, monthly, or
> whatever?

Probably once a week.

I've been making budgets in an OpenOffice spreadsheet.  The top of the
sheet has my personal budget in it, the bottom of the sheet has my
proprietorship's budget.  The totals for each budget are in the
middle.

I make up these budgets as best I can ahead of time.  Then when I get
paid personally, I usually put just enough into the business to cover
its budget for that period.  But of course unexpected expenses arise,
so sometimes I'm forced to take money out of the business and use it
personally.

> You searched Google, etc.? Is that where you expect to find things like the
> entire text of books with a title like "Accounting for the Sole
> Proprietorship"? If you plan on doing your own accounting instead of paying
> an accountant to do that for you, isn't that the sort of material you would
> want to learn?

I think I have a reasonably good handle on how to do accounting with
My Massive OpenOffice Spreadsheets, but not so much with GnuCash.  I'm
still very much a GnuCash beginner.

When I started my previous business, I consulted a couple accountants,
and didn't find them at all helpful.  I became determined to do all my
accounting all by myself, which worked out very poorly.  But the happy
(and expensive!) news is that I learned quite a lot about accounting.
It's been years since I bounced a check, and none of the tax
authorities ever complain about any of my returns.

Thanks for your help!

Don Quixote
-- 
Don Quixote de la Mancha
quixote at dulcineatech.com
http://www.dulcineatech.com

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