I operate my incorporated export business from home - this takes up a substantial area of the residence and storage. For many years we have divided several costs such as heating, power, cars, communications and insurances between business and private for accounting purposes. The split is 80/20 – 80% being the business proportion.
My question is this: Is there a way to automate these percentages when I post to the individual accounts. This of course also impacts the Australian GST calculations for each.
Prior to using Manager for all our accounting I have been (and still am) manually doing the calculations via an Excel spreadsheet at GST time. That still leaves Manager with the unproportioned accounts. Any help appreciated. Thanks.
I know nothing about GST calculations. And Manager will not calculate percentages for you. But I can tell you an easy way to account for the kind of split expenses you describe.
Let’s say your internet service provider charges you $60 per month and that you can justify 80% of the usage as being for business, versus 20% personal. (I’m assuming Australian tax law permits such splits. Some jurisdictions do not. I am also assuming such expenses are allowable as direct company deductions. In some jurisdictions, they are deductible only as personal expenses of an employee or owner and are not considered company expenses at all. In that case, your spreadsheet is really the only option.)
Assuming they are allowed as company expenses, pay the bill from your personal funds. After all, the bill came to your home address. Enter an expense claim in Manager for 80% of the bill ($48) with yourself as the payer. Allocate the claim to whichever expense account is appropriate. Now the company has a liability of $48 to you, just as though you had spent personal funds on travel or something else. Apply appropriate tax codes just as you would if you paid a bill from the company bank account.
To clear the expense claim liability, since you are incorporated, spend money from the company bank account and reimburse yourself . You can do this as frequently as you like, but should probably do it at least annually so end-of-year reports are clean.
The disadvantage to this approach is you still must do the split calculation outside Manager. But your accounts are up to date and your tax calculations are handled by Manager.
There isn’t an automatic way to do the split but you can do the proportioning within Manager for GST purposes without needing the spreadsheet… When the expense account arrives, enter your Purchase Invoice with the first line having the 80% allocated to the expense with the appropriate GST. On the 2nd line allocate the balance to a BS Current Asset account called Private Usage. Then on a periodic basis (say monthly/quarterly) you can either reimburse the company by making a deposit or if you are using the Employees, transfer the balance to the Employee Clearing account and make a reduced payment.
Alternatively, if you are using Payslips, do a deduction which would be allocated to Private Usage
Thanks Tut. Effectively this is what I have been doing but in reverse. I have been paying via the company and posting the total payment to each account. I see what you mean so I will need to think it through and possibly edit and do as you suggest, but in reverse. Create a loan account Equity? for the private accounts. The private account would have an entry in a new account under liabilities. Am I on the right track?
Ok, thanks Brucanna. That’s neat. Both explanations from yourself and Tut have helped. I trust the GST box will allow me to choose something other than 10% - in this case 80% of the total GST to match the amount posted. I will give t a try. Thanks again.
You don’t have to change the GST box or make any other strange adjustments. Lets assume your expense invoice was for 100 + 10% GST = 110. The Purchase Invoice entry would be as follows:
1st Line : Expense Account : Amount = 80.00 : GST = 8.00
2nd Line : Private Usage : Amount = 22 : no tax.
Total = 110.00
In future, Manager should have some module to handle private usage allocations automatically. For now, you will need to split manually either on each transaction, or periodically by journal entries.
Such a module would be very helpful. It seems several posters have similar thoughts. Thanks Lubos.