Consulting Business Accounts

[Kevin Davison]

When I receive and advance payment from a customer for a block of hours I
create a new invoice and set the income account to Liabilities:Unearned
Revenue:<Name of Customer>. That puts the total invoiced amount into
Assets:Accounts Receivable, the taxes into Liabilities:HST, and the pre-tax
purchased amount into Liabilities:Unearned Revenue:<Name of Customer>.

When the customer pays the invoice I set the Transfer Account to
Assets:Current Assets:Business Chequing Account.
That clears the total invoice amount from Assets:Accounts Receivable and
puts the total amount invoiced into Assets:Current Assets:Business Chequing
Account

This leaves the pre-tax amount purchased by the customer in
Liabilities:Unearned Assets and the tax amount in Liabilities:HST

At the end of each week I total my hours, for each customer and enter a
transaction in Liabilities:Unearned Revenue:<Customer Name> that transfers
the amount owed into Income:Service Revenue:<Customer Name>.
I've even gone a step further and been totalling time separately based on
the rate paid. I charge different rates for Onsite Service, Remote Service,
Travel, and After Hours service. That lets me enter transactions to move
money from an Unearned Revenue account to Income:Service Revenue:<Customer
Name>:Onsite Service (or Remote or Travel, etc).

The only issue I've found with this so far is that the money invoiced to
the customer shows up in the Unearned Revenue account as of the date that
the invoice is posted rather than the date that it's paid. I usually just
edit that transaction date afterward to reflect the payment date. That's
not ideal and would be interested in finding a better way but I haven't
figured that out yet.

Hope that helps a little bit.

On Tue, Dec 8, 2015 at 2:52 PM, dathome <dathome at optusnet.com.au> wrote:

> I need some advice on how to set up accounts for a consulting business. We
> usually form lump sum contracts with our clients and then receive
> progressive payment against this over the course of a year as work is
> completed. What sort of account should be set up for the original contract
> amount and what should be used for the progressive draw down of it?
>
>
>
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-- 
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*Kevin Davison*
Email: kdavison at cyber-wizard.ca
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