[gnue-sb-discuss] Notes on my accounting system

[Stanley A. Klein]

To help with the roadmap, I took a few minutes to gather information on my
accounting system and how I use it in my consulting business.  I have been
using QuickBooks 5 since 1996.  The functions I use are as follows:

1.  Set up chart of accounts

I have attached below my chart of accounts.  Some of the accounts were
defined by  QuickBooks and some by me.  There is an "account type" that I
have filled in except for the type "Expense", i.e., the unmarked accounts
are expense accounts.  Note there is a hierarchical structure.  All
accounts are named in alpha; if there are any numbers they are transparent
to me.

2.  Maintain item list

These are the items I have for sale.  The list has columns name,
description, type, account, and price.  I have three categories of items:
Consulting, Publications, and Travel.  Consulting goes to the consulting
income account, publications to the publication sales account, and travel
to the reimbursed travel account;  all three are listed as income accounts.

3.  Maintain name lists

QuickBooks maintains four name lists: Customers/jobs, vendors, employees,
and other names.  The customers/jobs list is indented (two level
hierarchical).  In order to organize my travel expenses by trips I need to
keep creating other names as pseudo-vendors when I enter the expenses.
QuickBooks does not let me set up an internal or "overhead" customer with
internal projects and associate expenses with the internal projects.  It
expects to invoice expenses associated with projects.  That's why I use the
workaround of pseudo-vendors.

4.  Record checks

This is a function I use to record checks and associate the checks with one
or more accounts.  These can be expense accounts, employee advances, or
owner's capital draws.  I can also associate an expense with a customer/job.

5.  Record "credit card" charges

The "credit cards" are actually money the business owes me, similar to an
employee "expense account".  They function similarly to the checking
account, except the amounts are recorded in the "credit card" accounts and
I later either reconcile them with the employee advances or write checks to
cover them.

I also maintain spreadsheet "journals" for some office expenses (postage,
copying, cash purchase of publications, and office supplies), for local
travel (mileage, Metro fares, parking/tolls, and meals), for telephone
expenses (that are a portion of phone bills), and for fixed assets.  I post
the totals to the credit cards from time to time, sometimes just at the end
of the year.

6.  Create invoice

The invoice items are either consulting hours or reimbursable travel
associated with customers/jobs.

7.  Create packing list

This is based on a function called "cash sales" that looks like an invoice.
 I used it when I was selling a document I had written.  I enclosed the
packing list with the document when I shipped it.  The payments were either
by check or by credit card (which went into the Pending merchant card
charges account). 

8.  Receive payment

This is a function under which I select a customer and get to select the
invoiced items to that customer that are covered by the payment, which goes
to either the bank account or undeposited funds.

10.  Funds transfer

This is what I use to do things like paying off the "credit cards' from the
"employee advances".

11.  Reports

There are several reports I use, including the profit and loss statement,
the balance sheet, and the details by account.  I have the accounts set up
so they easily transfer to the items on the US Schedule C income tax form.
There is supposedly a function to help that but it isn't flexible enough to
do what I need.  I add some of the items on a spreadsheet before I put the
numbers on my tax form.  Also, I depend on my local travel spreadsheet to
record my automobile mileage.  When I transfer the non-reimbursable mileage
to the acccounting system I multiply by the mileage rate the IRS announces
for the year.  However, it goes on the tax form as mileage and gets
multiplied there by the IRS rate.

When I take a trip I fill out an expense report with columns the same as
the categories of travel expense it the accounting system, and manually
transfer the numbers.  If the travel is reimbursable (by a customer/job) I
include a copy of the form and appropriate receipts with the invoice.

There is a register for each account and I sometimes look at those.  There
is also a "gee whiz" function that lets the user click on a report item and
pull up the details.  There seem to be multiple ways of doing some things,
for example entering transactions directly into the register without going
to the main function screens.

That's about it for what I use.  There are a lot of other functions, but I
don't seem to use them.  Perhaps it is the relative simplicity of my business.

I hope this helps the accounting aspect of the roadmap.


Stan Klein

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Here is my chart of accounts.  I edited it from the "chart of accounts"
report.  There are some "other" accounts on the list below that don't show
up on the list I maintain but I think are there to cover items added to the
parent account that do not show up in the subsidiary accounts.  I removed
most of them, but left some in.  Some of the accounts, such as rent and
building repairs, are unused but I didn't delete them.

(Note: the accounts of type "Expense" are unmarked in the "type" column.
Also, I don't remember if I put the asterisks in or why they are there in
some names.)

                           Stan Klein Associates, LLC
     03/29/03                   General Ledger
                             As of March 29, 2003

             Account                            Type (other than Expense)

      Business Checking Account                 Bank
      Accounts Receivable                       Accounts Receivable
      Employee Advances                         Other Current Assets
      Pending merchant card charges             Other Current Assets
      Undeposited Funds                         Other Current Assets
      Fixed Assets                              Fixed Assets
        Accumulated Depreciation                Fixed Assets
        Asset Accounts                          Fixed Assets
          Books                                 Fixed Assets
          Equipment - computer                  Fixed Assets
          Equipment - office                    Fixed Assets
          Furniture and related                 Fixed Assets
          Software                              Fixed Assets
      Startup expenses                          Other Assets
        Accumulated Amortization                Other Assets
        Startup expenses                        Other Assets
      Accounts Payable                          Accounts Payable
      Paid by personal check                    Credit Card
      Petty Cash                                Credit Card
      Travel Expense Account                    Credit Card
      Sales Tax Payable                         Other Current Liabilities
      Owner's Capital                           Equity
        Contributed Fixed Assets                Equity
        Draws                                   Equity
        Investments                             Equity
      Retained Earnings                         Equity
      Bank Interest                             Income
      Consulting Income                         Income
      Other Regular Income                      Income
      Publication Sales                         Income
      Reimbursed Expenses                       Income
        Reimb - Travel, Auto                    Income
          Reimb Travel - Auto Mileage           Income
          Reimb Travel - Auto Pkg/Toll          Income
          Reimb - Travel, Auto - Other          Income
        Reimb - Travel, Car Rental              Income
        Reimb - Travel, Conference              Income
        Reimb - Travel, Local Trans             Income
        Reimb - Travel, Lodging                 Income
        Reimb - Travel, Meals                   Income
        Reimb - Travel, Other exp               Income
        Reimb - Travel, Transp Fares            Income
      Advertising
      Bank Service Charges*
      Cash Discounts
      Contributions
      Depreciation Expense
      Dues and Subscriptions*
      Equipment Rental
      Insurance
        Disability Insurance
        Liability Insurance
        Insurance - Other
      Interest Expense
        Finance Charge
        Loan Interest
        Interest Expense - Other
      Licenses and Permits
      Magazines and Tech Papers*
      Miscellaneous*
      Office Supplies
      Outside Office Services
      Postage and Delivery
        Business Correspondence
        P. O. Box
        Publication delivery*
        Publication direct mail
        Postage and Delivery - Other
      Printing and Reproduction
        Other sales material/brochures
        Publication Printing*
        Publication Sales Material
        Printing and Reproduction - Other
      Professional Fees
        Accounting
        Legal Fees
        Professional Fees - Other
      Rent
      Repairs
        Building Repairs
        Computer Repairs
        Equipment Repairs
        Repairs - Other
      Taxes
        Federal
        Local
        Property
        State
        Taxes - Other
      Telephone and Internet
      Travel - Local
        Automobile
          Auto - mileage
          Auto - parking/tolls
          Automobile - Other
        Conference Registration*
        Local Transportation*
        Meals
        Travel - Local - Other
      Travel - Reimbursed
        Automobile
          Auto  - mileage
          Auto - parking/tolls
          Automobile - Other
        Car Rental
        Conference Registration*
        Local Transportation
        Lodging
        Meals**
        Other travel expense*
        Transportation Fares
        Travel - Reimbursed - Other
      Travel - Unreimbursed
        Automobile
          Auto - mileage
          Auto - parking/tolls
          Automobile - Other
        Car Rental
        Conference Registration*
        Local Transportation
        Lodging
        Meals
        Other Travel Expense*
        Transportation Fares
        Travel - Unreimbursed - Other
      Utilities
      Interest Income                           Other Income
      Other Income                              Other Income
      Other Expenses                            Other Expense