How to Manage A Business Credit Card Account In GnuCash

In the tutorial, you will learn how to manage a credit card account in GnuCash to keep track of all your business credit card expenditures.

It is not uncommon to use a credit card for some of your business transactions after all a credit card account is like a short-term loan that comes in handy when you have a business, but then you .eventually have to pay back the money, often with interest.

Credit card transactions are a liability because it is money you owe. In GnuCash The purchases you make with a credit card are classified as expenses.

You have a couple of options when entering credit card transactions. The simplest method is to only track monthly payments to the credit card company.

This method only requires you have a checking account, a credit card liability account, and a credit card expense account.

The obvious limitation of this simple credit card setup is that you cannot see where your money is going. And since you are tracking business expenses you want to be as transparent as possible, when it comes down to your business expenses. If not for yourself for tax purposes.

GnuCash Business Features

GnuCash is a free open-source finance application, that anyone can use to manage their personal and small business finances. It’s designed to be easy to use, yet powerful and flexible.

The business features in GnuCash are quite extensive; particularly for a free product and include double-entry accounting functionality, a checkbook-style register for tracking both income and expenses, you can reconcile bank accounts with ease, and it can handle transactions in a variety of currencies. The really great thing about GnuCash is it is based on professional accounting principles to ensure balanced books and accurate reports.

It is an excellent option for startups and small businesses with limited budgets. The product offers some very specific advanced accounting features that are designed to be used by businesses.

The accounting needs of a business are quite different from that of a person. Businesses have customers that owe money, vendors which are owed money, employee payroll, more complex tax laws, etc. GnuCash offers business-oriented features to facilitate these needs such as:

  • Accounts Payable (A/P)
  • Accounts Receivable (A/R)
  • Customer and Vendor Tracking
  • Budgeting
  • Reporting
  • Payroll

Automatic statement reconciliation is also available in GnuCash, with banking transactions automatically downloaded and matched with system transactions.

There is also a bill payment reminder in GnuCash which will notify you when bills are due to be paid, and most importantly, will also notify you when a customer’s payment is late.

GnuCash comes with over 30 prebuilt reports, including:

  • Account Summary
  • Income
  • Expenses
  • Transaction Report
  • Balance Sheet
  • Profit & Loss
  • Portfolio Valuation, and many others.

Reports support graphical views of the data, including pie charts, bar charts, and scatter plots. The reports can be exported to HTML files, and are easily customized.

International Support

There are many built-in features to facilitate interaction with the international world we live in today.

Automatic File Backups and Crash Recovery

GnuCash makes a backup copy of your data each time your data file is saved. Program preferences let you set how many in a series of backup files are saved. Keeping multiple backups never hurts, and definitely helps if you need to restore a file going back weeks. GnuCash saves log files to document changes made to data so it is possible to recover work in the event of a power outage or system crash.

A Mobile APP is available for Gnucash, GnuCash for Android allows you to keep track of all of your financial transactions, and later import those transactions into GnuCash.

GnuCash Beginners Guide

Before you begin working on GnuCash, it is a good idea to have a basic understanding of Accounting Concepts.

GnuCash is easy enough to use that you do not need to have a complete understanding of accounting principles to find it useful. However, you will find that some basic accounting knowledge will prove to be invaluable as GnuCash was designed using these principles as a template.

The Basic Accounts

Basic accounting rules group all finance-related things into 5 fundamental types of “accounts”. That is, everything that accounting deals with can be placed into one of these 5 accounts:

Assets -Things you own

Liabilities -Things you owe

Equity– Overall net worth

Income – Increases the value of your accounts

Expenses – Decreases the value of your accounts

It is possible to categorize your financial world into these 5 groups.

For example, the cash in your bank account is an asset, the business loan you owe the bank is a liability, money earned in the course of your business is income, and the cost of office supplies for your business is an expense.

The Accounting Equation

The accounting equation is the relationship between the 5 basic accounts and how one type of account affects the others:

Assets – Liabilities = Equity

You can increase your equity through income, and decrease equity through expenses. For Example: when you receive sales income you become “richer” and when you pay for office expenses you become “poorer”. This is expressed mathematically in what is known as the Accounting Equation:

Assets – Liabilities = Equity + (Income – Expenses)

This equation must always be balanced, a condition that can only be satisfied if you enter values into multiple accounts.

For example: if you receive money in the form of income you must see an equal increase in your assets.

As another example, you could have an increase in assets if you have a parallel increase in liabilities. Such as in the case of a business loan that increases your assets.

The Double Entry System of Accounting

GnuCash uses what’s called a double-entry accounting system. This is a formal system that’s a worldwide standard for accounting. What a double-entry system means is that every single transaction or every record in GnuCash has at least two records that are going on behind the scenes. There are two transactions, a debit, and credit, and they have to add up to the same amount.

Most of the time, you don’t see this happening. For example, when I create an invoice, you’re sending it out to a customer, and an account of yours will get debited. That account is the accounts receivable account. It’s the account that’s waiting for this money.

When your customer pays you, that payment gets credited from your accounts receivable, and it’s debited into your company’s checking account, which is where the money is arriving.

Every single transaction needs this double system to tell it where to go and where it’s coming from. Different types of accounts will handle debts and credits differently. In some accounts, a credit means the account is decreasing in value; in others, it means the account is increasing.

GnuCash makes it easy for newbies to enter debits and credit transactions by using the term deposits and withdrawals instead of debits and credits. If you prefer to use the term debits and credits it is possible to turn on that feature.

Lesson 1. How to Install GnuCash On Your Computer

GnuCash Tutorials Gnucash can be installed on windows or mac computers, desktops, or laptops. GnuCash is available for older operating systems. To download the latest stable release of GnuCash visit gnucash.org …
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GnuCash Tutorials https://youtu.be/3tHOZrDRC0gNow that the program has been installed it is time to setup the chart of accounts or what Gnucash refers to as the business accounts …
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GnuCash Tutorials Setting up the accounting period in Gnucash tells the system the beginning and ending  annual accounting period dates you want to use for calculating  income, profit and loss and net assets …
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GnuCash Tutorials In this tutorial I go over a few of Gnucash’s basic functions to get you up and started  quickly and easily! …
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GnuCash Tutorials In this GnuCash Quick Start Tutorial, you will learn how to enter a transaction, which should be the very first transaction the opening balance.  …
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GnuCash Tutorials In this tutorial, I will explain what are split transactions and I will cover in detail how to enter split transactions into GnuCash …
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GnuCash Tutorials If you use a credit card in your business you will want to watch this video. In this video I will cover how to manage your business credit card account in GnuCash, including how to record a refund …
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GnuCash Tutorials Reconciling your monthly accounts is a must do! It is the only way you will know if the transactions you are enter into  Gnucash match your financial statements. In this tutorial, you will learn how to reconcile your Gnucash checking account …
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Gnucash can be installed on windows or mac computers, desktops, or laptops. GnuCash is available for older operating systems. To download the latest stable release of GnuCash visit gnucash.org.

2. How to Setup A Business Account In GnuCash

Now that the program has been installed it is time to set up the chart accounts. The chart of accounts, or what Gnucash refers to as the account tree is what you will use to keep track of your business income and expenses.

To begin, open the Gnucash program by clicking the Gnucash shortcut icon on your desktop. The program created the icon when you installed the program, as long as you left that option checked. If you don’t see the shortcut on your desktop look for the program in your windows start menu.

 

3. How to Setup A Business Account In GnuCash-Part 2

Once you Apply the business settings the Save As Dialog Screen should appear. In this next step of the business accounts setup, you will name your accounting file and create a folder to hold the files.

This step is crucial because GnuCash generates a lot of files and if this step is not done properly, your files will end up outside of the folder intended to hold the business files and all mixed in with your files in your document folder. When done right your files will be saved and organized into the folder specifically created to hold your Gnucash files.

4. Tour Of The GnuCash Interface

Each time you open GnuCash, you will find that the Tip of the Day screen pops up, ready and available to offer helpful tips about using the program: These helpful tips provide useful information for beginning users. To view more of the tips, click on next to continue viewing the tips. When you have finished Click Close to close out the Tip of the Day.

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