[16.8.41] Added ability to create custom subsidiary ledgers

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The latest version supports custom subsidiary ledgers. A subsidiary ledger is a group of similar accounts whose combined balances equal the balance of a specific balance sheet account.

An example of a subsidiary ledger is “accounts receivable” where the balances of all customers accounts equal the balance of the Accounts receivable account on the balance sheet. Or inventory, where the total value of all inventory items on hand equals the balance of the Inventory on hand account.

Some businesses may require special accounts because the in-built subsidiary ledgers are not suitable. For example, a real estate agent may require a custom subsidiary ledger to manage trust accounts in a landlord’s ledger.

To create a custom subsidiary ledger, enable the tab Special Accounts.

Within this tab, you can create all subsidiary accounts. For example, a real estate agent will create a new account for each property they manage.

You will notice, all special accounts will be automatically assigned to the Special Accounts control account. Usually it’s preferable to create a new control account on the balance sheet and assign these special accounts to that control account. In this case, a real-estate agent could create a liability account named Trust funds payable.

You can have multiple control accounts which are made up of special accounts. This is useful if you require multiple custom subsidiary ledgers.

Special accounts can be then used for most transactions as if they are regular accounts. For example, if a real-estate agent receives rent from a tenant, it would be recorded under Cash Accounts tab as a Receive money transaction.

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You don’t have to be real-estate agent to take advantage of custom subsidiary ledgers. If you have many loan accounts, instead of showing them individually on a balance sheet, you can create all loan accounts within its own subsidiary ledger. This will ensure your balance sheet is concise enough to be easily analyzed.

You can also use custom subsidiary ledgers to track store credits given to customers (e.g. gift cards or customer loyalty programs). For example, if a customer buys an item for $500 and uses their store credit, you can easily see the store credit each customer has on account, then apply it to their receipt so they only pay the difference.

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This is an interesting addition to the program and I think it will be very useful for many people.

One suggestion. Click on Special Accounts and then add Control Account that will handle special accounts. So for example Open Special Accounts and have Control Account Properties and within Properties Control Account have the list of properties. Then you can have another control account say Loan Book and under that Control Account have all your loans and so on. This way you keep the list of Special Accounts shorter by breaking it up into which control account the special accounts go into. Also it will make it easier to add Special Accounts to the correct control Account.

Can this concept be replicated to the Profit and Loss Section as well. For example for a home, you might have rent, electricity, gas, water, car insurance, food etc. However most people would want to be able to click on Food and view their Food Expenditure by meat, fish, vegetables, fruits etc. So using the “control account” Food as the main expense account and then you can create Special Accounts such as Vegetables, Meat etc that get put into the food account but also allows you to view each food category separately. In addition, when the budgeting functionality comes in, you will want to allocate a food budget to the food expense account, not to each sub food account such as fish, fruit etc.

I would also find it useful if in the inventory items section, instead of having custom income and custom expense accounts, this could rather be replaced with Custom income Special Account and Custom Expense Special Account which then falls under inventory-cost and inventory-sales in the profit and loss statement. This way, there is only one inventory expense and inventory income account on the profit and loss statement but with the ability to view the subledgers of inventory in terms of computers, laptops, whiteboards etc. I have decided that sub accounts or custom income and custom expense accounts is not workable as I don’t want to view all the inventory categories on the profit and loss statement. Special Accounts implemented within the inventory items section would address this issue and would be very useful for other expense accounts like my food budgeting example.

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This looks nice. Can it be linked to Taxes too?

In India, Service Tax is made up of three components. Each of them needs to be maintained separately. Currently, we need to maintain a separate excel sheet to keep a record.

If tax breakdown could be assigned to individual special accounts, it will solve all the problems.

Som

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Special accounts cant be used under Payslip items or in Non-inventory items. will the possibility come later? @lubos

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@lubos I am unable to select suppliers when I created a control account that is made up of suppliers.

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Where as I have some Suppliers defined.

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Create the supplier control account first at the chart of accounts and then go and click on the supplier tab and create New supplier. Under Control account Field you will see the already created control account.
Just select it and save @wahab

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@Abeiku Thanks a lot that works. I didn’t see the control account option under Supplier.

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Payslip items - definitely coming soon.

Non-inventory items - Not sure yet, what’s your use case for this?

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When I run payslips I want all payroll Liabilities to be summed up in a control account on the face of the balance sheet to save space on my balance sheet because the list is very long.

For none inventory items. I set up non inventory items for withholding tax payable purposes which I enter negative amount against during purchase or payments, and I have many rates which is required in my country. So I would just make it sum up in one liability account as Withholding tax payable on the face of the Balance sheet.

You could also avail special accounts for tax codes.

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@Abeiku, but if Manager supports withholding tax on purchases like it does for sales, then you don’t need this feature on non-inventory items. Correct?

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Honestly I don’t need that feature, in my country withholding tax payable is paid to the tax authority by mid of the next month and the tax authority is responsible for producing the tax certificate which will be collected and sent to the suppliers so all I do is collect it and pay. But withholding tax receivable is very important and different, it the one that needs monitoring inorder to reduce your annual tax burden. I don’t know for other countries though.
I am sure some users will use the model. Other user may also manage withholding tax payable the way I do it.
So my suggestion, you can ignore the non inventory items aspect now and go ahead with the Withholding taxes tool.

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It will be best to have a section where all sub ledgers can be created and have the possibility of being linked to any account within the businesses account (chat of account).
By this, a sub ledger column will have to appear after the account column (irrespective of whether the need to assign or not to assign).
This will be more easy and simple for a company with many subsidiaries where these subsidiaries pay various forms of funds to the parent company and vice versa. In as such a situation, it will be easy for the parent company to track payments in and out in respect of each subsidiary in relation to all the accounts in the chat of account.

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One more thing, Special accounts are very cool and very needed, but I think it needs to be incorporated into the chart of accounts settings where users after creating an ordinary account can select “part of a special group” option and select an already made control account. The current procedure is great but i feel Special accounts tab can be removed to reduce the tabs and added to Chart of accounts settings. I don’t know the amount of work that will involve though.

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I was going to suggest this as well as I think this should be in the chart of accounts area. You can view the special accounts on the summary page, so having access to the special accounts tab is kind of redundant. However this would depend on how frequently people add special accounts?

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Special accounts need to be in a tab. Yeah, I know, you can get break-down of special accounts from Summary tab. The problem is that Summary tab shows balances in home currency. There needs to be a place to show balances of special accounts in their foreign currency (if multi-currency is used).

All subsidiary ledger accounts have their tab (cash accounts, customers, suppliers, employees, fixed assets, inventory items, capital accounts etc.). Special accounts shouldn’t be an exception. They really do belong in a tab. Not somewhere tucked away in Settings.

Chart of Accounts shouldn’t be showing special accounts directly because Chart of Accounts is about creating layout of your Balance Sheet and Profit & Loss Statement and special accounts are not meant to show on these reports individually.

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I had not considered that myself as I had not seen the tabs as subsidary ledgers. You are quite correct, special accounts should remain as a tab. I would still recommend that the special accounts tab should be broken up into special account, control account then the individual entries as this will reduce the list of entries in each view. Perhaps rename it to Account Divisions as special accounts is not really intuitive to its use.

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@lubos I agree

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in my case it is a church organization, where all the funds( both liabilities and incomes) of the mother church are contributed by the smaller churches.
As at now, it is not possible to link all the sub ledgers (smaller churches) to all the liabilities and the income accounts though i am able to select special account for all the accounts (liabilities). I can only link them to only one account in the ledger.

Since we able to link special account to all ledgers, there should be a possibility of linking all sub ledgers to all control accounts.