Setting Up Sole Proprietorship Books

[brad]

I'm not an accountant, & perhaps the others who have chimed in are much
smarter at this than I am, but ...
I have a similar setup, perhaps simpler, with a rental property.  I find
it very easy to keep my personal stuff & the rental in 1 gnucash file.
I just have an expense:rental account (+ subaccounts), & income:rental
account.  It's easy to generate an Income Statement and select only the
relevant accounts.    One key decider might be if you have a separate
bank account for your business, or you use the same one.  


On Thu, 2009-12-31 at 13:00 -0800, Don Quixote de la Mancha wrote:
> 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