Hi Ken Brown, I think that you need what you asked for, a good Chart of Accounts example, which you will implement into a new GnuCash entity. How about the following Chart of Accounts, designed by me just now for a single person in the United States with some regular salary income plus some income from a part-time home business that is a sole proprietorship, so the person just files regular individual taxes at the end of the year, but with a schedule reporting their business income. In the U.S. that would mean they file an individual 1040 form with a Schedule C: "Profit or Loss from Business". The person doesn't need or have a separate bank account for the business, but they do need to track expenses in a way that supports their maximizing the allowable deductions (expenses accepted by the taxing authority) in the business income schedule. I further suppose the person uses their personal vehicle sometimes for business purposes, and they track or estimate their mileage that is business-related. And they will claim expenses for their business's use of the home, which occupies, say, 20 percent of the home's square footage. This doesn't matter, but I am supposing the part-time business is something craftsy like quilt-making, with the finished product sold on Etsy or similar online marketplace, and the business has some capital equipment, such as a quilting machine, and has inventory of materials and supplies.
First, you must consult the tax forms that you will need to complete at the end of the year. The Schedule C in the U.S. requires separate reporting of various specific types of business expenses including Advertising, Car and Truck expenses, Insurance, Interest, Legal and professional services, Office expense, Rent, Supplies, Taxes and licenses, Travel, Deductible meals, and some other types, in its Part II, so you will want to separately track what you spend for those exact types of expenses directly, or otherwise track what you need in order to fill out those lines of the tax form. Home office expense is a calculation based on square footage or requiring a different tax form. Note that in the U.S. only 50 percent of business-related Meals & Entertainment expenses can be deducted, but you want to track all of that type of expense so that you have documentation for what you will claim as allowable. (Save your receipts and keep records, perhaps annotated onto the receipts or perhaps better written onto a traditional hard-copy calendar, giving names of persons you met and what business topic was discussed.) For business-related Travel, perhaps all of your airfares and car rental and hotel costs for a business trip would be allowed, but there are specific guidelines in the U.S. about an allowable per diem rate for meals and there are differences for first and last day of travel vs. days in-between. (Keep receipts and suitable records for this too.) For automotive expense, in the U.S. the person may choose between claiming actual expenses of gas, car insurance, car repairs, etc., vs. claiming an allowance based on their recorded business-related mileage times a standard rate which in 2020 is 57.5 cents per mile. I'm not positive, but I think if you are claiming actual expenses, then you still need to track your business vs. personal mileage so you can apply the business mileage percentage times the actual car repairs, etc. The chart of accounts should help you track your actual car expenses, although that will be different than what is allowable for you to charge in the business profit and loss schedule. Note Part I in the U.S. Schedule C requires you to report the business's Gross Sales, and any Allowances and Returns, and Cost of Goods Sold (COGS). Part III calculates COGS based on beginning-of-year and end-of-year inventory of Materials and Supplies for making the product, Purchases of Materials and Supplies less cost of any items withdrawn for personal use, and some other costs. Finally, when you compose your Chart of Accounts you want it to be organized sensibly for your purposes, so you must use account numbers to control the order of items in the basic financial statements (Balance Sheet and Income Statement in GnuCash, while unfortunately GnuCash does not support reporting of the 3rd basic statement, the Statement of Cash Flows). Use a standard approach to numbering, with 1000's being for Assets, 2000's for Liabilities, 3000's for Equity, 4000's for Revenues, 5000's for Expenses. So here goes: 1000 Assets 1100 Cash on hand 1200 Checking account 1300 Savings account 1400 Accounts receivable (business) 1500 Inventory of materials and supplies (business) 1500 Equipment (business) 2000 Liabilities 2100 Accounts payable (business) 3000 Equity 3100 Owner's equity 4000 Revenues 4100 Salary (from a job not part of business) 4200 Sales of product (business) 4800 Interest income 5000 Expenses that are all or mostly business 5100 Advertising 5100 Contract labor (business, amount paid to independent contractors who do work for the business) 5200 Cost of Goods Sold (business, calculated only at end of accounting period and entered as a journal entry involving purchases and beginning and end Inventory of supplies and materials) 5300 Insurance (business, if separate) 5400 Legal and professional services (business) 5450 Meals and entertainment (business) 5500 Office expense (business, e.g. expenses of paper, printer ink, purchases of computers and office furniture) 5550 Sales tax (if applicable, business) 5600 Selling expenses (business, e.g. Etsy fees) 5650 Shipping & postage 5700 Travel (business) 5900 Depreciation (business, applying Equipment asset purchase cost over years of its usage) 6000 Expenses that are all or mostly personal 6100 Automotive (both personal and business) 6110 Gas 6120 Auto insurance 6130 Registration and fees 6200 Cable and internet 6300 Dining 6400 Groceries 6450 Insurance-health 6460 Insurance-renter's 6500 Rent (part of which will be claimed within Home office expense) 6600 Telephone 6700 Utilities 6800 Taxes 6810 Federal income tax 6820 State & local income tax 6830 Social Security 6840 Medicare 6850 Unemployment insurance Yikes, that is a lot of accounts! Hey anyone who wants to say I've made this too complicated, I personally don't think so. The above accounts are all either very much required in tax filing or very simple and clear. Probably I have missed some things, too; suggestions to improve the above would be appreciated. Ken, does this constructed example help? --Don Cram On Mon, Sep 21, 2020 at 10:41 AM John Ralls <jra...@ceridwen.us> wrote: > > > > On Sep 21, 2020, at 8:42 AM, Jimmy R via gnucash-user < > gnucash-user@gnucash.org> wrote: > > > > I believe there is a wizard to select personal or business chart of > accounts > > which you can edit or add/remove > > > > Yup. > > File>New starts it. If you want to use templates to add to an existing > book go to the Accounts page and use Actions>New Account Hierarchy. The > third or fourth screen in allows you to select from various templates that > add accounts to your CoA and the screen after that collects opening > balances. > > More details at > https://www.gnucash.org/docs/v4/C/gnucash-guide/basics-running-gnucash.html#basics-acct-hierarchy > . > > Regards, > John Ralls > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. 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