[GNC] Setting up Gnucash for Household

[David Cousens]

Malcolm,

As others have said you really need professional advice. It will depend upon
your local legislation and how your business affairs are structured whether
you need to maintain separate books for your business activities or not.
What follows is an attempt to outline how GnuCash might be used and does not
constitute any advice that any of the suggestions are optimal for your
situation or even legal to use in your juridiction. In accounting a person
or business which has a separate legal existence (primarily responsibility
for the debts of the business) is usually referred to as an entity. A single
legal entity might however might have a number of separate business
activities which might have an operational separation but no separate legal
existence.

GnuCash has the flexibility to be able to setup treatmentof your finances
either in one single book, two books for the business activities of yourself
and your wife and another one for your and your wife's personal activities
if that were suitable. The optimal strutcure will depend upon the taxation
and business legislation you operate under and its record keeping and
reporting requirements about which we cannot offer any advice.

If you did use a single set of books, it would likely be a good idea to have
separate income, expense, asset, liability and equity accounts for your
personal activities and each of the business activities/entities. In GnuCash
the top level accounts are of type Asset, Liability, Equity, Income and
Expense and any separation of accounts between your activity/entities would
have to take place under each of the top level account. This would allow you
to structure separate reports for each activity for example. 

One limitation to keep in mind is that the business features of GnuCash, if
you have need to use them are not designed to support multiple entities in
the one set of book,s which might make business reporting difficult.

If the books (files) were to be totally separate you would treat transfers
of funds into the business accounts from your personal accounts as a
decrease in your personal equity and an increase in your equity in the
business activity with the reverse for transfers from the business account
to your personal account with a transaction of the form

Asset:CurrentAssets:Cheque        Cr  $xxxx
Equity:                                       Dr $xxxx

in your personal book/file (notated appropriately in the description and
memo fields and another separate transaction

Asset:CurrentAssets:BusinessAccount   Dr $xxxx
Equity:Owners contributions                 Cr $xxxx   

in the separate book/file for the business.  

If you were using a single set of books (file) a transfer of funds might
look like

Asset:CurrentAssets:Cheque               Cr $xxxx
Asset:CurrentAssets:BusinessAccount  Dr $xxxx
Equity:Personal                                  Dr $xxxx
Equity:OwnersContributionstoBusiness Cr $xxxx

which would be a single transaction with what are called 4 splits or entries
in Gnucash to the four accounts.

Hope this gives you some ideas about how GnuCash might be used to discuss
with your accountant.

David Cousens



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David Cousens
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