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Accounting help? Just a rather basic Q??
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 2005-07-12 12:28 PM |
Extreme Veteran  494   Horse Country |  Subject: Accounting help? Just a rather basic Q??Hullo... Just wondering if there are any accountants out there who can answer me this rather basic question... I'm using QuickBooks (only marginally relevant to the question) to set up my wife's MaryKay business. I've got a pretty good hold on A/R, A/P, invoices, bills, and all that junk. Here's my question, though... I've recieved money from customers, and it's sitting in the bank account. Some of this money needs to be set aside for certain purposes (tithe, future inventory purchases, annual fees of various kinds not-yet-due, "pay" for the wife and me, future office expenses, etc.) So right now I've got this big balance in my checkbook and it's not divided up any, so I still don't know when we go to Office Depot how much we can afford to spend on supplies, or when it comes time to order more inventory, how much we have to pay for it. We'd also like to save up for a new laptop by putting aside a certain % of income... How do I divvy up this money????? Do I set up a separate account for each "future spending purpose" and transfer the money from my "bank" account to each of these according to the plan as it comes in? If I move the money out of the "bank" account, how do I then later reconcile that account? Do I use "subaccounts" within the "bank" account to temporarily allocate the money until the corresponding expense is incurred? Are these accounts/subaccounts "asset" or "income" or "expense" accounts? I'm planning to take an accounting "101" class this fall, but I think if I can get this one concept square in my head, I'll be about 95% of the way there... Any online tutorials or references you could point me to would be helpful as well... Oh, and if you want any excellent, well priced cosmetics or fabulous skin care products (including a nice all-body wash for men)... http://www.marykay.com/glunderwd ... I'm guessing that the Extra Emollient Night Cream would be excellent for preventing saddle sores...  |
| 2005-07-12 7:55 PM in reply to: #196122 |
Elite 3020  Bay Area, CA | Subject: RE: Accounting help? Just a rather basic Q?? First of all, you should have a separate bank account for business purposes. That said, you can either (a) set up a budget - so you know where you WANT to/ are going to spend your money (the correct way to do this) or (b) kinda quick and dirty, but a good way to see what you're doing to begin with (also, this is not the correct way but... hey, it works) - set up the accounts you want to spend the money from (Capital expenses, Supplies, Inventory) and then enter the transactions in those accounts as if they really happened but use a FUTURE date (say 2-3 months out) - posted back against the bank account. Then your bank account will show a correct current balance, but a final balance based on the transactions you entered for future purposes. Then you just update the future transactions. If you buy supplies, update the supplies transaction with the correct date and correct amount, and create a new future transaction for the budgeted amount. When you reconcile accounts, only reconcile to the current date - all of these future transactions are never reconciled, since they haven't actually taken place. |
| 2005-07-12 9:58 PM in reply to: #196122 |
Extreme Veteran 494 Horse Country | Subject: RE: Accounting help? Just a rather basic Q?? Thanks! Umm, yeah, we have completely separate bank accounts for the home and the business. I've tried (b) before, and it's cumbersome but it does work. Hard to keep straight, though. I use it with Quicken with the home stuff because I never could get the Budget tool to do what I wanted. I've had other advice that says budgeting is the way to go... but budgets require historical data to be even remotely accurate - otherwise they're just SWAGs, especially when you have no idea how much income to expect. We did have some startup expenses go on our personal accounts, but I'm treating them as a loan to the company, to be repaid as time goes by... |
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