Does anyone have any hints for separating business and provate finances?
Marcin Borkowski
I've been using Ledger for more than 5 years now (GnuCash earlier), and
I'm pretty happy with it. However, I have now a challenge. Instead of
a regular salary, I get payments for invoices, which are not equal each
month. This is inconvenient from a private budget perspective. I've
set up a separate business account at my bank and I plan to set up
a constant monthly transfer from that account to my private one, maybe
even called "salary". (Of course, I will ensure that my average monthly
business income is greater than the "salary".)
I would like to separate these two areas in Ledger, too. Ideally, I'd
like to be able to see a "private" report, a "business" report or
a "total" report.
Any hints?
TIA,
--
Marcin Borkowski
http://mbork.pl
Robin H. Johnson
There just happens to be a posting if your business account pays the
invoice where you charged the business money.
--
Robin Hugh Johnson
Gentoo Linux: Dev, Infra Lead, Foundation Treasurer
E-Mail : rob...@gentoo.org
GnuPG FP : 11ACBA4F 4778E3F6 E4EDF38E B27B944E 34884E85
GnuPG FP : 7D0B3CEB E9B85B1F 825BCECF EE05E6F6 A48F6136
Kent R. Spillner
I'm sorry for not replying sooner! I meant to reply but then your message got lost
in my inbox & I forgot about it until now. :(
> I would like to separate these two areas in Ledger, too. Ideally, I'd
> like to be able to see a "private" report, a "business" report or
> a "total" report.
I just started using ledger earlier this year to help my wife manage the books for
her contracting business. Here's what I've come up with so far; works for us, but
like you I'm interested in hearing if others have other tips for making this easier:
* In my top-level directory I have two files named 2019.ledger and 2020.ledger, and
two directories named 2019/ and 2020/. 2019.ledger looks like this (2020.ledger
looks similar):
include 2019/business.ledger
include 2019/personal.ledger
* 2019/business.ledger looks like this:
include business-opening-balance.ledger
2019-01-01 * Secretary of State
Expense:<business name>:Articles of Incorporation $250.00
Asset:<business name>:Checking
2019-01-15 * Client #1
Asset:<business name>:Checking $1,000.00
Income:<business name>:<client name>:<project name>
2019-01-15 * My Wife
Expense:<business name>:Payroll $500.00
Asset:<business name>:Checking
...
* 2019/business-opening-balance.ledger looks like this:
2019-01-01 * Opening balance
Asset:<business name>:Checking $0.00
Equity:<business name>:Opening Balance:2019
* 2019/personal.ledger looks like this:
include personal-opening-balance.ledger
2019-01-15 * My Wife
Asset:Personal:Checking $500.00
Income:<business name>:Salary
...
* 2019/personal-opening-balance.ledger looks like this:
2019-01-01 * Opening balance
Asset:Personal:Checking $1,234.56
Asset:Personal:Savings $9,876.54
Equity:Personal:Opening Balance:2019
Hopefully, that gives you some idea of how you can manage business & personal finances
in separate files but still combine them to give a picture of your overall finances.
If you want to see all of your 2019 balances you run: ledger -f 2019.ledger balance.
If you want to see only your 2019 business balances you run: ledger -f
2019/business.ledger balance.
In my opinion, the two keystones that hold everything together are the liberal use of
ledger's include directive, and the use of Personal or <business name> as the 2nd-level
account name in all transactions. What I discovered through trial and error is that
having that 2nd-level disambiguator is really useful when you need to track the flow of
money from the business account to your personal account: Income:<biz>:... =>
Asset:<biz>:Checking => Expense:<biz>:Payroll => Income:<biz>:Salary =>
Asset:Personal:Checking.
Things that I don't like about this scheme are: 1) I have to manually compare
Expense:<biz>:Payroll and Income:<biz>:Salary in balance reports to confirm they
balance to zero, 2) I have to be extra diligent about entering payroll in both the
business & personal ledger files without interruption or else I'll forget where I left
off and then have to compare the two side-by-side in my text editor to make sure I
didn't miss any transactions. For 1) I don't think you can avoid having to manually
compare the two, because if you actually synthesize transactions that balance
automatically then I think it makes your job harder at tax time when you need to figure
out your total payroll expense for the year. If I'm wrong about that and there is a
way to create transactions that balance automatically and have a way for ledger to
report the total cost of one expense category I'd love to hear it! For 2) I think
that's just the cost of trying to track business & personal expenses in separate files,
and at this point I've built up enough scripting to help automate a lot of my workflow
that it's not been a problem for me in a while.
Hope that helps! I'm happy to answer questions you may have if I did a poor job
explaining any parts of that, and I'd also love to hear other hints & tips others
might have to improve it.
Best,
Kent
o1bigtenor
personal and business absolutely cannot coexist. So you are told to use
separate credit cards bank accounts and never the two shall meet. Except
they meet all the time! When you go to the office supply shop and you
are picking up school supplies for the kids and you remember that need
item xx or xy or ab for the office or the business - - - - do you make
a separate
trip through the checkout for that? I don't.
At least here in Canuckistan there is provision for business use of home
expenses and also much less used but also the home use of business
expenses.
So how do I get things done - - - - its called accurate records. When I
purchase items that are business expenses and there are also home use
items - - - - well everything is logged. In the Canuckistani version of the
GIFI codes #9350 is 'Personal Expenses'. Now that listing of GIFI codes
was an 8 page document when I started with it - - - - but its now well
over 40 pages including quite a few different accounts in the '9350'
section.
I have not been audited so I don't know how much hurt might result
but knowing that many large companies fiddle all kinds of stuff in
their books means that if I'm challenged my response would be
something like. I have very detailed accurate records - - - (means
I really don't do any fudging or hiding!!!!) if they want to challenge
them I'm going to have fun mocking the crap out of their ineptitude.
(Might cost me lawyer money but there is mountains of evidence
for that so I'm not worried about any problems.)
In short - - - IMO very detailed accurate records and detailed
documentation (keeping ALL your receipts!!!!!!!!!!!!!!!!!!!!!!!!!!!!!)
means that you should have no problems.
As to a private vs a business report - - - - I just use my account
numbers. I can pull a report for a time frame of my choosing at
any time on any account or group of accounts - - - so the
distinction has really disappeared.
HTH
psionl0
Any time you transfer funds from your business to your private bank account or an invoice includes goods that are for private use, they would be classified as "Owner Drawings" and they reduce the business's equity. That is to say, they would go under the category of "Equity:Owner Drawings". It is your choice whether your private account includes goods paid for by the business but bank transfers should definitely be recorded. It would be recorded as FROM <business name> TO <bank account>. <business name> count either be a sub-category of income, loans or bank or just its own category.
Note that if your business is actually a company then you can't simply withdraw money/goods from it. It has to be classified as "Equity:Dividends" in the business account and in your private account it would be "Income:Dividends" and there are tax implications for doing this.