Hello All, I am using Manager for recording all my business transactions. I am having a problem for which I need help. We are three partners, we spend the general expenses like conveyance, refreshments, printing etc. From time to time we claim this from the company. How do I do this process in Manager?
yes but unfortunately didn’t understand much of it.
What is the structure of the company - is it a partnership? is it a limited company with three shareholders? are the three employed as employees?
This will determine the type of expense claim payers you need to setup
It’s a Partnership company with three equal partners.
Then you should already have capital accounts for the three partners. And they will already be set up as expense claim payers of the “member” type. Beyond that, the Guides @Patch linked to provide extensive instruction and examples.
Thanks Tut. I am trying but might disturb you for help.
Tut one thing I cannot understand. Our partners make a monthly consolidated statement comprising of various expenses in various heads made within the month. They present it for disbursement at the end of the month. Suppose three partners are A, B and C. So they are Expense Claim payers but who’ll be the payee? If the claim is by them?
Your question is answered in the Guide.
First, record the transactions claimed by the partners into Purchase Invoice tab.
Then, close those transactions using the Expense Claim tab.
Lastly, pay the partners on the Receipts and Payments tab.
@marofrancia’s procedure is wrong. Please do not follow it. Purchase invoices are used to record credit purchases by the business. Expense claims are used to record purchases by other entities on behalf of the business. An expense claim cannot “close” a purchase invoice. Following the described sequence will result in recording the same expenses twice. Additionally, you will be left with a payable amount in Accounts payable that seems to be owed the supplier. But that will not actually be the case, because the partner already paid the supplier from private funds. Once again, read and follow the Guide.
it doesn’t happen whenever we do this with the workflow we follow. this is how i “close” the payable section using expense claims
Then on Payments, we make the payment under Employee Clearing Account >> Name of Employee.
My bad…I just realized as I was typing this in that we’re talking about Partners here and not employees…We follow this workflow for our employees who reimburse their expenses in the course of doing their jobs…
@Tut is right…follow the guide…Thanks for the correction…
@marofrancia, you did not say what your screen shot shows. But a purchase invoice should also not be used when an employee purchases items on behalf of the business with private funds. Only an expense claim should be entered. The double-counting problem is the same as for a partner with a capital account. The only difference between capital account members and employees is that the liability for the expense claim goes to capital accounts for members and Employee clearing account for employees.
With employees, expense claims are usually reimbursed with direct payments at the next payroll cycle. With capital account members, that option also exists, but many businesses wait until earnings are distributed at the end of an accounting period and make adjustments then. Regardless, a purchase invoice is never required. In fact, from the business’ perspective, an expense claim is very much like a purchase invoice, creating a liability the business must pay off in some manner in the future. You would not enter two purchase invoices for the same purchase, and you should not enter both an expense claim and a purchase invoice. After all, the business did not make any purchase from the supplier.
Having written the above, it occurs to me that what your screen shot shows might be your using an expense claim to transfer an Accounts payable liability from a purchase invoice on something the business did not buy to an employee who did. While that would keep your accounts in balance, it completely misrepresents the events behind the purchase. It is effectively recording a situation in which (1) you bought something from a supplier on your business’ credit, then (2) you transferred the debt to your employee, then (3) you reimbursed the employee for the debt you transferred to them, then (4) the employee paid the supplier. But that is not what happened, and it adds unnecessary steps to achieve correct account balances. What actually happened is (1) the employee paid a supplier, then (2) you accepted the liability to reimburse the employee, then (3) you reimbursed the employee.
Hi @Tut, yes you’re correct, an additional step has been created in the workflow I follow. The only reason I do it like this is to make sure I tag the supplier related to the purchase that was made by an employee while doing there job say on the field. The tax bureau in our country requires businesses that claims deductible expenses to reflect the supplier’s details, even if the purchase was just for a pen bought from a convenience store which we may or may not ever buy from again. Thus, even if though it wasn’t purchased under the company’s credit line, I always create a liability account first related to the purchase that was made and make a payment towards that liability account and yet another if it was transferred through the employee’s clearing account.
I’m prettry open to adopting changes as I learn them through the Guides herewith and the Forum. I look forward to learning more from you and the rest of the community. Hopefully I can share something useful too.
I understand why you are doing this, @marofrancia. It is a way to satisfy your tax bureau’s requirement. But it might also present a problem if you are audited. You will have no sales invoice from the supplier to justify your purchase invoice and might be suspected of fraudulent accounting.
I do not know details of your tax bureau’s requirement. But I wonder if you could not satisfy them by adding notes to the expense claim about the supplier. Then, all your documentation would match your records.
This is something I do as well but in this case the expense payer includes the purchase invoice with his claim. The purchase invoice is made out to the business and the expense supplies proof that he paid the supplier on behalf of the business typically with a credit card payment receipt
So we have the purchase invoice made out to the business and proof of payment