New user - previous business accounting experience - need tips!

[Tom Collier]

Here's how you work with pass-thru expenses that you want to bill to
your customers but don't want to count as income. Don't use any of your
Expense accounts to track reimbursable expenses. They're not YOUR
expenses. (Unless your customer stiffs you. Then they become Bad Debt
expenses.)

First, create a Current Assets account called "Reimbursable Expenses,"
or "Passthru Expenses," or some name that indicates these expenditures
will be billed to clients. This where you will temporarily park
expenditures for items that you sub out and pay for yourself.

Create a vendor account for every vendor that you will pay directly and
will then bill your customer for reimbursement. Example: you're going to
pay for some brochures, create a vendor account for Printer Smith.
Shipping? Create vendor account(s) for whatever shipper(s) you use.

We'll assume that you have already created a Customer account for your
Customer Jones.  Track the work you're doing by using the Job feature in
GnuCash. So, create a Job for Customer Jones called "Ad Campaign", or
whatever.  (Digression: you'll also need to create a Job for each sub
out vendor, too. In this example, you'd also call that job "Ad
Campaign."  In GnuCash, Customer Jobs and Vendor Jobs are NOT
interchangeable, but using the same name for each Job helps you tie a
batch of work together.)

When you get the brochures from Printer Smith, create a bill to yourself
from Printer Smith.  Use the description field or the Job number to
track what and who the brochures are for. CRITICAL: Allocate the Expense
Account field in the bill to Liabilities:Passthru Expenses. Post the
bill from Printer Smith.

If Printer Smith won't give you credit and you paid cash for the
brochures, process the payment immediately after you create the bill.
Use the Business -->Vendor -->Process Payment feature to select where
your payment came from...cash, checking account, credit card and so on.
Repeat this process for each expense that you want to bill for
reimbursement.  CRITICAL: Be sure to allocate any such expense  to
Liabilities:Passthru.

When you create your invoice to Customer Jones, you (CRITICAL:) allocate
the brochures to Liabilities:Passthru in the Income Field on the
invoice. Ditto for every other item you are invoicing to be reimbursed
for.  Finally, on the last line  of the invoice, you allocate your
time/hours to Income:Sales. When you are finished, post the invoice.

When Customer Jones pays you, use the Process Payment utility (Business
--> Customer -->Process Payment) to take payment and your Passthru
Expenses are zeroed out; your Income:Sales shows only the time you
billed for. 

Use your invoice records to track who and what the reimbursable expenses
were for if you need to go back later. Just don't try to use YOUR
expense accounts to track these kinds of things. That way lies
frustration...not to mention erroneous bookkeeping. It's like expecting
your oil pressure gauge to tell you how fast you're going. Wrong tool
for the job.

Tom Collier


On Fri, 2012-04-13 at 11:43 -0700, SybreedFan wrote:

> Hello,
> 
> I stumbled across GnuCash and would really like to get it up and running for
> use in my small business. I do have previous business accounting experience
> with a major accounting program (ADP) and I'm having some trouble adjusting.
> 
> Here's my current situation:
> 
> I am a graphic designer and often times need to sublet work to a printing
> agency if a customer wants brochures, business cards, etc.
> 
> I have developed a brochure design for a customer and sent it off to my
> printing partner to be produced. I pay the printer and then include the
> printing and shipping charges on the customer's invoice. I have set up the
> vendor and customer info.
> 
> First I have posted the vendor's bill with a split - I want the printing and
> shipping charges to go to separate expense accounts. When I receive the
> customer's payment, I would like to be able to CREDIT these accounts the
> same dollar amount, however it will only let me transfer to one of the
> income accounts. The only actual income off of this invoice would be my
> design time, which I want to go to sales income - but once again, I want to
> be able to credit my printing and shipping charges back to those expense
> accounts.
> 
> This is just what I was accustomed to in ADP - I am by no means an
> accounting guru. Does anyone have any tips for me? Maybe there's a better
> way to do this? I greatly appreciate any help!
> 
> --
> View this message in context: http://gnucash.1415818.n4.nabble.com/New-user-previous-business-accounting-experience-need-tips-tp4555648p4555648.html
> Sent from the GnuCash - User mailing list archive at Nabble.com.
>