[GNC] Contingency Funds was: Re: How to record Personal income tax ?

[Adrien Monteleone]

Yes, one can simply track the liability, but this goes a step further and attempts to segregate savings to meet it. (the basis of the ‘envelope’ method)

For budgeting purposes, the envelope method isn’t easy with GnuCash and requires lots of extra work, but a simple segregation of funds like you mention is certainly doable. Having an actual additional account at a bank is even better.

From my past readings on the list, there are some here using GnuCash for their churches. Hopefully one will see this thread and chime in.

Do you have some specific issues you’ve encountered so far that you need help with? (If not related to a contingency fund, perhaps start a new thread like you did here, so the topic is more visible)

Regards,
Adrien

> On Mar 21, 2020 w12d81, at 9:17 AM, Eric H. Bowen via gnucash-user <gnucash-user at gnucash.org> wrote:
> 
> While I do agree that for specific tax guidance Mr. Long should turn to
> experts from his locality and system of laws, it seems to me that what
> would help him is information on setting up and using a "Contingency
> Fund"...in his case, for taxes, but in the general it could be applied
> to maintenance or other unpredictable expenses where your funds are
> commingled with, say, your checking or savings account but where you
> wish to designate a specific portion of those commingled funds for that
> purpose and add to it on a regular basis whenever it drops below a
> certain level.
> 
> Suppose, as an example, that you had a nonprofit such as a small church
> with one savings account. They keep $12,000 in a maintenance contingency
> fund. One day the air conditioning compressor for their sanctuary goes
> out, and it costs $3,500 to repair which was not in the regular general
> maintenance budget. They wish to pay for the repairs out of their
> contingency fund, and then direct, say, $250 per month back to the fund
> until it returns to the $12,000 level.
> 
> This could address Mr. Long's situation; say that he sets aside $350 per
> month (or whatever his accountant/bookkeeper tells him is a reasonable
> estimate) in a tax contingency fund and at the end of his accounting
> period, with help from his accountant, he determines his actual tax
> liability and pays that amount out of the contingency fund. The balance
> of the fund then could be set aside for next year's taxes or
> redesignated for general spending.
> 
> I'd appreciate guidance in this matter myself as I'm trying to set up
> Gnucash for my own church. I do plan to retain a local accountant to
> review my accounts and books, but I'd like to do as much of the basic
> groundwork myself as I possibly can. Thanks for any help.