[GNC] Posting private payments

[Adrien Monteleone]

The basic approach look fine here, but I’d consider posting payments you make for the actual construction and for the materials under an Asset account called something like “Work in Progress” rather than the generic Asset account. (it is probably safer to consider the parent asset account, or any parent account really, as a placeholder only) You may desire to have separate child accounts for materials and labor if you need that level of detail until the project is finished.

Then when construction is complete, make an entry moving the value of Work In Progress to the “Installation A” account.

Note, if you pony up a set amount of cash into some account (or petty cash) that you then draw out of for this installation, then you should treat those separately as capital investments by each partner directly to that asset account. (cash/bank, etc.) Then make transfers to the Work In Progress account(s) as materials are purchase or work completed.

Also, consider, is this ‘installation’ part of your ‘inventory’? That is, will you be selling or leasing this completed installation? If so, both the ‘Work In Progress’ and the completed ‘Installation A’ accounts should be children of Assets:Current Assets:Inventory.

If you regularly will be buying materials to be used in several installations, then consider a Inventory:Raw Materials account. For example, you might buy bolts by the pound, but not use all of them in any one installation. You would move to Work In Progress only the value of the actual bolts used. (you probably should employ other specialized software, or a spreadsheet to manage these calculations for each project as GnuCash is designed only for the end-result accounting entries)

It would be a good idea to read up on accounting for manufacturing businesses to get ideas on how to handle accounting for the production of goods that you are going to sell or lease.

I maintain books for a small operation where we have partners who usually buy raw materials and equipment personally on their own. I’ve set up an Equity:partner-name:Investments account for each partner, and under these, I created Capital Investments, and Reimbursable accounts. (we intend to be paid back for those personal purchases, but you could call this simply In-Kind Purchases or something similar if you intend the equity to remain on the books) When we pony up cash for a larger purchase, or simply give cash to another partner for them to use when physically buying materials or equipment, I book this against Capital Investments and Petty Cash. Otherwise, all personal purchases go under the Reimbursable account. (“In-Kind Purchases” or similar otherwise)

But please speak to a CPA about any of this so you have guidance specific to your legal jurisdiction.

Regards,
Adrien

> On Jul 18, 2018, at 1:24 PM, arjanl via gnucash-user <gnucash-user at gnucash.org> wrote:
> 
> Hi, I'm new to GNUC, but I'm aware of most of the regular bookkeeping
> methods. My business partner and I just started a new business and we are
> paying for stuff out of our own pockets at the moment. These payments are
> booked on two equity accounts, called "Private payments A" and "Private
> payments B". The stuff we bought so far (materials) is all being used for an
> installation, to be found in our books under "Assets/Installation A". 
> 
> Now comes my question: how should I post all the payments that are done for
> building the installation? I now make transfers from "Private Payment"
> directly to "Assets", to be transferred to "Assets/Installation A", when the
> installation is completely built and paid for. So no transfers to
> "Assets/Cash" or any Expense account.
> 
> Is this OK bookkeeping wise?
> 
> Many thanks in advance for your responses!
> 
> 
> 
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