[GNC] Customer Invoice Ledger Entries (Debits & Credits) for Freelancers?

[Michael or Penny Novack]

It's NOT just "freelancers". It's the more general problem of invoicing 
only supported for when on accrual basis, not for when on cash basis. I 
have been keeping books for non-profits and these are usually cash 
basis. On the other hand, some individuals are required to use accrual 
basis.

So the issue is (for you) how hard to make the annual or quarterly 
adjustments (depends on how you file tax). I don't know what YOUR "line 
items" might be, but if you are a freelancers providing a service, the 
income side adjustments might not be hard at all. And you are in a 
position not to have "pending" expenses at end of year/quarter.

Michael D Novack

ps -- producing the report with various accounts excluded not hard at 
all. Your extra work is entering twice for each invoice when posted 
received or paid (the second transaction moving from "pending" to 
"paid"in income and expenses.



On 6/17/2021 7:07 PM, GrantSRobertson wrote:
> When entering a customer invoice, it appears that the only balancing accounts
> (the non-Accounts-Receivable accounts) GnuCash will allow one to choose from
> are income accounts and certain,  non-special, liability accounts. Normally,
> this would be just fine for a business accounting system because businesses
> accrue their income when it is earned. However, individuals (such as
> freelancers) accrue their income only after it is paid. Therefore, if I am
> not paid for months (it happens), then all my tax calculations will be off
> because I will be paying taxes on income earned (the business way) instead
> of only on income paid (the individual's way).
>
> If I had complete control, I would assign an Equity:Pending_Income account
> as the balancing account, to show that I had "equity" but not income, up
> until the time I actually get paid. Then, after I get paid, I would manually
> transfer that money from that special Equity:Pending_Income account to an
> appropriate income account. I recognize that when applying a payment to a
> customer invoice, the only ledger entries made are the transfer from the
> Assets:Accounts-Receivable account to the Assets:Whatever_Banking_Account
> account. So, any other transfers/ledger-entries would need to be made by
> hand.
>
> However, because the above is not possible, I am looking for other
> alternatives.
>
> My first thought is to simply introduce another level to the income accounts
> hierarchy. Something like:
>
> Income:Pending
> Income:Paid   (placeholder)
>                    :<all the other accounts normally under income>
>
> I would still have to manually create a separate ledger entry to transfer
> money from the Income:Pending account to the actual income account it
> belongs in.
>
> And, I would then have to figure out how to generate reports that ONLY
> reported income from under the Income:Paid placeholder parent account. Would
> that be too very difficult? Or would I just be creating an ever-increasing
> amount of compounding complexity to my accounting workflow?
>
> In the end, it seems GnuCash is not really designed for freelancers yet. All
> assumptions are that one is operating as a business with paid employees. It
> seems to me, to achieve the most flexibility, GnuCash should allow users to
> custom configure the behavior of the invoice and payment features, to allow
> us to automatically do whatever transfers and ledger entries we see fit to
> achieve the intended goal.
>
>
>
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There is no possibility of social justice on a dead planet except the equality of the grave.