GNUcash setup

[Adrien Monteleone]

Thanks Dave,

To clarify, what I was suggesting was this:

Assets
Assets:Personal
Assets:Entity1
Assets:Entity2

with appropriate sub-accounts under each.

In line with this you’d also have:

Expenses
Expenses:Personal
Expenses:Entity1
Expenses:Entity2

with appropriate sub-accounts under each, and so on for Revenue and then Liabilities and Equity as needed.

Each of those ’second levels’ should probably be marked as placeholders to avoid a mess.

The other alternative would be this:

Assets
Assets:Current Assets:Checking
Assets:Current Assets:Checking:Personal
Assets:Current Assets:Checking:Entity1
Assets:Current Assets:Checking:Entity2

That is, if such actual real accounts exist for each entity. The same would go for liabilities and Equity would most likely ALL be under Personal, so no need for separate accounts.

For expenses, this would be the alternate format:

Expenses
Expenses:Utilities
Expenses:Utilities:Electricity
Expenses:Utilities:Electricity:Personal
Expenses:Utilities:Electricity:Entity1
Expenses:Utilities:Electricity:Entity2

with the individual subs being their respective percentages allowed to be deducted on the tax return. (or more likely, for that particular expense type, just leave everything personal and calculate the percentage at tax time off the main expense, which is personal)

Some expenses might only be for each of the business entities or one of the other, so not necessarily all expense categories would have entity sub-accounts.

In the second set of examples, the level just above the entities should probably be marked a place-holder.

Otherwise, yes, you’d have to keep separate books for each and figure out how to handle ‘paying yourself’ according to your local tax laws. You’d also have to figure out your itemized deductions a bit differently, but separate books would also give you separate ‘loss or gain from business activity’ numbers.

I’ve seen prior discussions showing both these methods with respect to rental property tracking. All properties are part of the same legal entity and so should all be on the same statements and return, but the owner wanted to track their profitability individually.

Personally, I keep everything in one book and don’t separate entities at all because I don’t have individual concerns I need to analyze. But I do track separate “revenue streams” for various work.


Regards,
Adrien

> On Mar 2, 2018, at 6:26 PM, DaveC49 <davidcousens at bigpond.com> wrote:
> 
> Ken, Adrien
> Just a quick note re "separate account trees for each business".
> 
> I have experimnted to try to do this within the one set of books (i.e. file)
> in Gnucash and have never found a way of doing it.
> 
> My problem has always been creating an entity level top account as there is
> no top level account of type entity in the Gnucash structure which can have
> the other major account types (i.e. Asset, Liability, Equity, Income,
> Expense) as the type of its sub accounts. 
> 
> The account type of a top level account is restricted to be one of {Bank,
> Cash, Asset, Credit Card, Liabilty, Stock, Mutual Fund, Income, Expense,
> Equity, A/Receivable, A/Payable,or Trading}. Having made a choice of the top
> level account (e.g. Asset),the choice of account type for a subaccount is
> restricted to types in the Asset and Liability classes , i.e.{Bank, Cash,
> Asset, Credit Card, Liability, Stock, Mutual Fund, A/Receivable, A/Payable}.
> If the top level account is of type Liability, the choices are restricted to
> the same list. If the top level account is an Equity account type, its sub
> accounts can only be of type Equity. Expense and Income class top level
> accounts can only have a type for the subaccounts of {Income, Expense}. This
> precludes setting up multiple entity structures with the entities as
> separate top level accounts with their own sub trees.
> 
> I think this is by design and that the expected strategy is to use separate
> files for separate entity. 
> 
> I have adopted the second strategy you mentioned of having "entity"
> subaccounts under each of the major top level classes {Asset,Libility,
> Equity, Income, Expenses} to separate my wife's, mine and a few minor
> business ventures we operate jointly or separately. It works OK, but
> increases the likelihood of putting a transaction in the wrong account and
> the balance sheets and income statements are not ideal but easily rearranged
> once generated. The main distinction for me is that none of these ventures
> files a separate tax return and they are basically at the hobby level since
> we retired.
> 
> David
> 
> 
> 
> -----
> David Cousens
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