Thank you soooooo much for your detailed reply. I definitely have some thinking and work to do.
(Suggest the following tracking codes - Business, Wife Tax Return, Husband Tax Return and Household)
Using tracking codes makes sense to me. So I should be able to add them now?
_(It doesn’t matter what bank or credit card has been used as it just becomes a P&L account plus tracking code allocation for that transaction.
I would choose BASIC - Income less Expenses design
(The important thing here is to get the actually required (transaction) accounts set up now). Bank & Credit Cards / Suppliers & Accounts Payable)
I would like to use Individually Shown. By doing so, it will enable me to track all transactions (purchases, payments, amount owing), and reconcile them as well right? Can I also download / upload my transactions at this point too?
HAHAHA! Yes I did contradict myself, didn’t I. I guess what I should have said was that I use the cash accounting method for business, and would like to use the accrual accounting method for personal. However as you also recommended accrual accounting (somewhat forcibly LOL), I guess I should be doing it for both personal and business.
With that said, I originally chose cash method because it was more basic (money paid out, money received, specify date, add up totals, give to accountant - Done). For me, the accrual method is much more complicated, for my little brain. Which is why I am having trouble with setting up Manager and my COA. I know theoretically, the only way to accomplish my goals is by switching over to the accrual method, (I remember that much of accounting) but it makes me nervous too because I don’t want to make mistakes. I don’t have a lot of extra time to really dig deep to make sure that I am doing this correctly. I am a visual learner too, which is never good, because I have to use examples to learn things.
When doing bank downloads, I will most definitely use bank rules. I am extremely excited about the ability to download transactions and use bank rules to save time. One of the main reasons, I was doing research.
P.S. I also love the fact that you caught my age in my prior post! But just to be clear, accounting is never fun!
Be careful. In some jurisdictions, accrual based accounting for personal taxes is not legal. This is another reason to consult with your accountant first about how to set things up. You seem fairly determined to decide about implementation before consulting. It might save effort to consult first. As I said before, whatever your accountant prefers can be handled with Manager. And it will be much easier to get advice about the program if you know what you’re trying to accomplish.
@Tut, you are bloody unbelievable - you previously had clearly posted this “rather than get general tax and financial advice from people who have not met you”, yet yourself have just posted (#18) an entire chapter and verse of “personal financial advice”.
I don’t think one could find a clearer demonstration of “self contradiction”.
More unwarranted scare mongering.
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What we have here is nothing more than Partnership accounting and if there is a change in that partnership then the normal standard partnership accounting practises would apply. For any accountant that can add one and one together, this issue wont be a problem.
In fact, once the mentioned Balance Sheet feature of Divisions has been implemented then any segregation would be a breeze.
They were referring to, if you convert the business from being sole/trader - partnership into a corporation (Ltd). You stated “I am not sure how this would be a problem?” and I agree - if such a change was to occur, then its only a matter of accounting entries in the respective set of accounts.
More scare mongering, they weren’t referring to personal taxes when they stated “would like to use accrual method for personal”. Refer to their comments:
I want to know what we are spending personally to help with budgeting purposes.
Why would my personal finances need to be submitted on government tax forms in the first place, and others.
I am not sure why, the entering of data under both is exactly the same - the cash or accrual basis is only a toggle switch for reporting purposes only.
I offered no financial advice. I recommended @Nieve obtain advice from a qualified accountant so she could ask specific, informed questions about how to do what her accountant suggested in Manager. There is a big difference.
No, what @Nieve clearly said is that her husband’s business is a sole proprietorship, but she wants to combine accounting for it with personal accounting, some of which—according to her descriptions—involves joint finances. More than standard partnership accounting would be involved in estate settlement. Again, I just recommended she seek advice from a qualified accountant on the best way to set things up for her heirs, since that is what she expressed concern about.
But I’m happy to leave you to help her. She seems pleased with the advice you are giving.
@Nieve
I generally find it is more difficult to get the questions right than the answer right.
I suspect the right question is how is it best to use Manager to optimise your families financial position, comply with regulatory requirements, and provide sufficient information to monitor family finances (which is likely to be different to government regulatory requirements). These should be achieved both now and in the future should you be able to offer less support to your husband.
All of the above requires classification of financial transactions. The most efficient time to do this is when the transactions occur, and recorded by relatively reliably using a different account for business and domestic spending. In fact unless this is done, if you sensibly cost your time, low value business transactions are best not deducted at all (your family business is worse off if you ask a professional book keeper to search through unsorted business and personal finances for business deductions. The same applies if you accurately value your time to do the same task). That is unless book keeping is you hobby. Looking forwards though, without you that is the reality your husband will face if you were to stop hiding it from him. How you structure the accounts doesn’t change this.
Looking again at the options
Options 1:- One Manager Business covering business and personal expenditure. Regulatory requirement / schedules are forced onto to personal expenditure management. Without hiding the true cost of this, it is an expensive way of managing a business. Should your business grow from a sole trader to a company you would also need very dramatic changes in your financial management, hence the early comment it doesn’t scale with business growth. In addition these restrictions persist independent of any future changes in your personal finance management requirements.
Options 2 and 3 differ in the presence or absence of a second Manger “Business” for personal finances. There is no Manager.io direct cost to having multiple business. As the accounting Manager Businesses are separate, regulatory time frames are not forced onto personal financial management. Similarly if you or your husbands personal financial management priorities change, this can be readily implemented.
I suspect the motivation to pursue option 1 is the desire to accommodate your husband lack of motivation to use different bank accounts for personal vs business expenditure. That behaviour can be accommodated with any of the above structures. The major cost to the family is the book keeping cost of needing to manually go through all business and personal receipts in detail to identify business expenditure / exclude personal expenditure. The differences in cost of recording under the different software models above is relativity small compared to the loss of automatic bulk importing.
If you want to maximise the chance your husbands business could survive without you and you can spend less time doing book keeping then separate business and personal finances. Accept minor business expenditure is not economically claimable if not document at the time of the transaction, and that your husband has chosen to writes off the loss of tax deduction, a dollar figure he should be aware of.
@Patch - in principle I concur with your comments, however the one point you don’t reflect upon is the impact when financial accounts (bank / credit card) have mixed use.
If a particular financial account has a mix of say, 80% business and 20% personal transactions, then under Options 2 or 3 you would have to duplicate the data entry of that 20% - that in itself is a hidden cost. Besides which, that would conflict with Nieve stated objective of only handling each piece of paper once and your observation “The most efficient time to do this is when the transactions occur”
Having to have that 20% of transactions entered twice, as per Options 2 or 3 ,is not being that efficient.
I disagree with “In addition these restrictions persist independent of any future changes in your personal finance management requirements”. If there are such changes, then you cease the current “accounting business” and open a new “accounting business” - hence my comments regarding partnership accounting, this eliminates the restriction persistence.
And this one I dispute “The differences in cost of recording under the different software models above is relativity small compared to the loss of automatic bulk importing”
Option 1 eliminates the need for any inter “business” current accounts as all bulk importing is allocated within the one business. Whereas, if 20% of the transactions relates to Option 2 or 3, then you have to maintain inter “business” current accounts and the potential of time consuming reconciliations if they don’t instantly balance.
Option 2 or 3 would be preferable if there was strict observance of correct financial account usage.
But apparently, that is not the case.
But just to be clear, accounting is never fun! 