personal and business

[Shane Litherland]

Hi Dave,

I've only gone part-way along combining personal/business, i.e. I
basically use it for business records, but at times I have to account
for expenses that have a private component, or I make private (cash)
drawings.

So, how I do this might get you on the starting blocks at least:

example - I get a rates or electricity bill, and most is attributable to
business expense, but some is private:

LIABILITIES:ACCOUNTS PAYABLE is where I put in the bill (invoice to be
paid) in its entirety, and split the total:

EXPENSES:PRIVATE DRAWINGS:UTILITIES:RATES (say, 10% of total)
EXPENSES:UTILITIES:RATES (the business amount, 90%)

(i've glossed over the inclusion of GST or similar taxes to keep this
example clearer to start with)

I currently pay the bill 100% from my business cheque account
ASSETS:CURRENT ASSETS:CHEQUE ACCOUNT

You could add a 'PRIVATE SAVINGS ACCOUNT' to your assets tree, and e.g.
pay the relevant bills or portion of bills from each asset account.

To keep my whole expenses reports 'clean' for business reporting (i.e.
only showing expenses that relate to business, not the private
expenses), I do a transfer at the end of each period (in my case,
financial year) from each EXPENSES:PRIVATE DRAWINGS:... subaccount, to
an EQUITY:PARTNER CONTRIBUTIONS:... subaccount

If you don't mind having e.g. expense reports that show combined
subtotals etc of private and business subaccounts then you can probably
omit the latter step. Another variation, is to do the transfers to
private equity, and if you want to run a report only showing business
stuff, put an amount in for the transfer. If you want to 'see' the
private amounts included in expenses and not bundled up in equity, just
change the amount back to 0 if or when you want to run said reports.

I have another situation in Gnucash accts where some of my 'business'
income has to be attributed to me as 'personal services income' (e.g.
consultancy/sub-contractor income) and reported on my personal tax
return. For GNUCASH purposes, it is part of my business income/costs,
but I have a string of about three sub-accounts to document that
'private income' amount from the business INCOME account, to a
LIABILITIES:PSI ATTRIBUTABLE and then on to EQUITY:MY CONTRIBUTIONS and
EQUITY:RETAINED EARNINGS.
This results in my 'equity / retained earnings' being a balance between
the 'personal services income' and the amounts of any private
expenses/drawings at the end of each period when I do any balancing
transfers as mentioned above. This whole process probably warrants its
own discussion so if you find you might be heading down that kind of
path with your accounts trees, let me know, otherwise just consider it
'food for thought'.

A final note, is that I enter all expenses as invoices, and use that
aspect of GNUCASH that makes use of A/P and A/R but you can still go
through the same process I've used by just entering split txns directly
into a liabilities account/s.

Leave it at that for you to digest, let us know if it's any use :-)

-Shane