Accounting for contractors using GnuCash?

[Christopher Lam]

I have an interesting solution for recording mileage within Gnucash.

I presume you have something like Expenses:Business:Travels already set up
in your local currency.

You could create an account called Expenses:Business:Mileage in currency
XXX, and it will contain only mileage records. It doesn't require double
entry recording, therefore all transactions will not balance with an asset
or liability account, but with Equity:Mileage, also currency XXX.

You can then amend the currency symbol to "mi" or "km".

Gnucash will count and report on your annual mileage appropriately.

Try and see if it works well for you.

Devs, I would hope that XXX does not receive special handling internally.
If it does just use any other unused currency.

On 29 Jul 2017 2:40 AM, "JHC" <jhc at gs11011.com> wrote:

I worked for decades as a contractor in IT. Briefly, what I needed as a
single entity was pretty simple, and fell well within the capabilities of
GnuCash.

I assume here you work as a contractor essentially in a 'do the work, get
paid' mode. Whether you operate on a b2b direct mode or in a 1099 mode
makes some difference, but as I found that difference was mostly in the
fine details. As a b2b operation, my cash flow went to a business account,
which then paid me and did all the deductions; that made two gnucash files,
one for the business and one for me. That was a minor complexity, but
dealing with the business side did cost me time and effort. The business
side then deals with things like managing retirement contributions (beyond
payroll deductions), quarterlies, and so on. Really straightforward. This
does have the advantage of various tax provisions, although not as many as
I thought; most of those provisions applied to me individually, with less
number farming.

Eventually I found it simpler to fall back to the simpler mode of working
through a 1099 relationship, sometimes directly to a client but more often
through headhunters. I worked, got a signed timesheet (usually), submitted
and was paid. So long as you can report your wages, you can track as much
of the payroll detail as you like. I did rely on the 1099s at tax time as
my final total arbiter, which meant that all I really had to track for
myself was the cash I got, which I applied as income to (from) a bank
account. It's possible to track all the detail of the payment/deduction
stream if you like, as well, although I found that unnecessary to my
purposes or comfort. After that, it's just a matter of tracking expenses to
whatever level of detail is comfortable to you, given the tax implications
of some things being more critical than others.

One point might be worth considering. When I worked for multiple clients,
either sequentially or simultaneously, I did break out both income and
expenses as subaccounts for each of them. It adds marginally to the work of
record keeping, but everything rolls up cleanly.

There are only a few areas that mattered for me as a contractor:
travel/entertainment, auto expense, and general business expenses. Each of
these are fully covered in IRS documents. I simply made them expense items,
with whatever detail was required. I kept receipts for all auto dollars,
since they did matter to my bank balance, but frankly I came out better at
the end of it using a standard mileage deduction. Same for t&e, using per
diem standards. If I had used a portion of my domicile as an office, I
would have put that under the general business expense object, and so on.
It's that simple.

One item that GnuCash does not manage well is mileage. I tracked it in a
small notebook in my car, noting that there are various phone apps that
might easily suffice (my inner luddite does not care for apps). I did move
my numbers into a spreadsheet for an annual summation, which was not an
issue. I also tracked days away from home in the same manner. There are IRS
rules involved here which require basically showing this material in a
recognizable contemporaneous format, if they ever ask directly (they never
asked me).

It helps to allow a 'petty cash' expense account, where cash expenditures
can be marked for business purposes with a split.

This very personal sort of accounting fits within GnuCash very neatly. At
tax time, my necessary numbers were mostly available by viewing the
appropriate accounts. I suppose I could have marked everything for tax
linkages, but it just was not that difficult. And my federal return has
consistently included forms 1040 and 2106. Boom, done. That simple level of
structure in GnuCash covered the basic numbers, and the outstanding
calculations took less than an hour. It's a bit more difficult to sort out
multiple state returns (the CA version is particularly entangled), but
that's where the subaccounts per client can shine. Most of them depend on
primary items from the 1040, but there can be some business expenses that
are either part of some other sum, or come from the 2106.

Of course you'll note that most of this too-long presentation has little to
do with GnuCash, and most to do with how your data can be organized.

I wish I'd found Gnucash years earlier.

hth

=========================================================


On 7/27/2017 1:28 PM, Buddha Buck wrote:

> I seem to be transitioning from full-time employment to software dev
> contracting. I don't know really what's involved in that, accounting-wise,
> in the US.
>
> Does anyone know of any resources for how to do the proper accounting as a
> contractor in the US, especially using GnuCash?
>
> Thanks,
>    Buddha
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>
>
_______________________________________________
gnucash-user mailing list
gnucash-user at gnucash.org
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.