Accounts structure for a worker cooperative (read: partnership) with expense accounts

[Maf. King]

On Wed 30 July 14 09:03:24 Benjamin Melançon wrote:
> We are a small collective, worker-owners each with an equal share in the
> company.  We're moving to GnuCash for accounting and i have two questions
> about equity accounts and expense accounts.
> 
> My first question is how to set up equity accounts.  This is for a worker
> co-op, but any partnership would probably do the same.
> 
> The documentation mentions creating an Equity subaccount for each member as
> an option —
> http://www.gnucash.org/docs/v2.6/C/gnucash-guide/accts-types1.html — which
> i've done, but i'm not clear what we put in as a contribution should
> balance *with*.  Practically, we started the company with nothing, and so
> would be putting in our equity contributions from earnings.
> 
> Say our first income was a $12,000 check.  It goes in Assets:Current
> Assets:Checking and is balanced by an entry in Income:Sales.  We could make
> three transactions where three debits from Income:Sales is matched by a
> credit each in Equity:Benjamin, Equity:Michele, Equity:Stefan?

Hi Ben,

Welcome to the list!

There are kinda two "concepts" of equity in GC - there is a type of account 
called "equity" which is where opening balances etc. are put (sub-account 
OPening Balances - this is only useful if you have balances at the start of 
your records, of course) or where you record the owner's contributions 
(Equity:OwnerEquity:Joe etc.)

The other sort of equity is effectively the running profit, and isn't really 
ever shown in the accounts other than in reports.

If you have put money into the co-op, eg. to buy equipment - then this would 
be a transfer between (something like) Equity:Ben and Assets:Bank, reflecting 
that you have invested some cash in the co-op.  If you haven't done this, and 
you are in the happy position of actually starting with real income, then 
there probably isn't any initial owner equity.  If you invested $300, and 
someone else put in $200, it doens't really matter to this sort of equity.

You'll find out how much "retained earnings" or "profit" is in the Co-op, and 
that number is the total owner equity available to pull out. (ie 1/3 of the 
total for each of you in this case)


> 
> Because we are all always going to have equal equity we could skip
> accounting for it in Gnucash.  The second question is i think parallel in
> how it would be structured and needs to be accounted for in GnuCash for our
> regular operation:
> 
> How to set up accumulating expense accounts for each member.
> 
> The idea is that as long as it's business-related, we let members of the
> collective control their own budgets.  This would probably also be
> equivalent to giving departments their own budget.  If the money isn't
> spent one month, it accumulates in the expense account for later months.
> 
> I've read how this would be best covered by categories or tags, a feature
> GnuCash doesn't have, but i think there is in fact value to doing it with
> real accounts, if i can figure out what balances with what.
> 
> We can create Assets:Current Assets:Expenses_Benjamin etc., and move $500
> each month in there from Income:Sales?  But then in looking at an expense
> imported into Assets:Current Assets:Checking i'm just not sure how to say
> it's coming from Assets:Current Assets:Expenses_Benjamin and going to
> Expenses:Office Supplies, say.
> 
> Am i close or far off?

CLose.  I'd imagine that you'd move the$500 from Assets:Bank to 
Assets:Ben'sBudget.  You could even have an account structure like
Assets:Bank
+-->Assets:Bank:BensBudget
+-->assets:Bank:StefansBudget
etc.
An especially good idea if the money doens't actually leave the bank.  (make 
sure you "include subaccounts" when you reconcile, though.)

When you buy, transfer from BensBudget -> Expenses:Widgets

HTH,
Maf.


> 
> I have searched rather extensively for answers to this, and am eager to
> contribute to documentation once we figure this out!
> 
> Thank you greatly for GnuCash and any help in using it,
> 
> ben
> 
> http://agaric.com
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-- 
Maf. King
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