[GNC] Setting up Gnucash for Household

[Malcolm Fitzgerald]

Hi David,

Thanks for providing a clear explanation of the options, it was very helpful for me.

Malcolm

> On 6/01/2020, at 9:32 PM, David Cousens <davidcousens at bigpond.com> wrote:
> 
> 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
> 
> 
> 
> -----
> David Cousens
> --
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