[GNC] How to best set up account structure for multiple Tax IDs?

[David Cousens]

Jens,

If you were to try and maintain enough separation of the affairs of your
companies and trusts in one set of books, you would have to duplicate the
transactions in any case. To keep a record of what is paid for from your
personal account for each entity you would need to run a virtual bank
account for each entity in any case as you have to record the transfer to
the equity of that entity even though you may only have one real bank
account e.g you purchase letterhead  for LLC1 from your personal bank
account for $100. You cannot simply record that as
                                                                     Debit                     
Credit
Asset:Personal:Bank                                                                  
100                         
Expense:LLC1:Office:Expenses                   100

Doing this you have no record of the transfer of money between the entities.
True your accountant could sort it out and would do so by creating record
like those given below. As someone else pointed out she/he will charge
handsomely for doing so.

To keep the separation of the entities you would have to have something like
this even in a single book/file
                                                                    Debit                      
Credit
Asset:Personal:Bank                                                                   
100
Asset:Personal:Investment:LLC1                 100

Asset:LLC1:VirtualBank                               100
Equity:LLC1:OwnerContributions                                               
100
Asset:LLC1:VirtualBank                                                              
100
Expense:LLC1:OfficeSupplies                     100 

If you maintain separate files for your entities the first two entries would
be in your personal.gnucash file/book  and the other four entries would be
in the LLC1.gnucash file/book and you would drop the entity. Effectively
there would be no real duplication of effort.

For money received by each entity the transactions would have to have a
similar structure ( with debits and credits reversed and an Income account
for each entity instead of an expense account).

I don't know about Windows or Macs but on Linux Mint the icons in the
toolbar showup with the first few letters of the filename so if you choose
the filenames wisely it is fairly easy to bring up the set of books you want
to make the entries in separate books while opening each file in a separate
instance of gnucash. If you have enough RAM you can leave all the files open
simultaneously andjust switch between them as required.

In that single book/file for each matching split in a transaction you would
have a huge list come up in the account selection field, not organised by
entity, from which you have to select the appropriate destination account
for the second split. The scope for error is large and the time involved in
sorting out errors will be demanding.

Hope this helps clarify why those of us with a bit of accounting experience
and/or practice recommend using separate files for each entity.



-----
David Cousens
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