Category Archives: Accounting

Happy new year!

2020 was like travel in a dark tunnel, full of fear and uncertainty.
Hope everyone has a good start in 2021, leave the fear behind, moving forward better and stronger.

New year, new start, new plan.

It is time to set a budget for 2021; project a healthy growth and monitor the spending for a better and profitable year.

Budget?
Yes, the budget.
Although most SOHO and smaller businesses seldom use a budget, it is good to monitor the expenditures during this uncertain period.

How to set a budget?

Consider using the average of your past few years actual (maybe past two to three years) if you do not know how to set a budget.

MoneyWorks

MoneyWorks support two alternative budget, A and B, for each financial year. You can enter directly into the budget editor, import, or paste from a spreadsheet. From the Show menu, select budgets to launch the budget editor.

MoneyWorks budget
MoneyWorks Budget

The budget editor is like a spreadsheet, rows of account and period in columns. Scroll down to the Profit and Loss account if you intend to prepare a budget for revenue and expenses. The sub-ledger, separated by a ‘~’, form part of the account list if you are using the departmental account.

Enter the monthly average of each account and copy across the periods. Save the budget, that’s it!

Monthly, you can view the progress by printing a Committed Budget report, compare the actual against budget.

QuickBooks Online

QuickBooks Online has an easy-to-use budgeting tool for SOHO and small businesses. It allows budget for the entire year, or budget for a specific project, class, or location.

Set up Budget in QuickBooks Online
Set up Budget in QuickBooks Online

Click the Gear icon (setting) and select budgeting. Then, click the Add Budget button from the budget list to add a new budget.

QuickBooks Online Budget
QuickBooks Online Budget

Enter the budget name, set the interval and continue with the budget value.

Use the QBO built-in Budget vs Actual report to monitor the actual performance against the budgeted value.

Plan it; monitor the spending, watch out the bottom line while you are busy with day-to-day.

Stay safe and healthy.

Setup inter-company in QuickBooks Online (QBO)

Although you can create multiple receivable accounts in QuickBooks Online Singapore version, the receivable field is not available in the sales invoice form. The intention ‘could be’ trying to simplify the process by having one receivable for each currency to prevent a mistake in the classification of account. For those who are using multiple receivable accounts in QuickBooks Desktop may take note of the differences.

QBO Customer
QuickBooks Online – Customer

Some user may create the subsidiary as a customer or supplier in QuickBooks. You can print a standard Profit & Loss or Balance Sheet report and set the column to display either by customer or supplier. You do not require any additional setting but have to separate the customer and supplier into two difference report. It’s workable but maybe a little tedious to some accountants.

How about using the class feature?

QuickBooks Online manages the class slightly different from the Desktop version. The class selection is only available for the detail line of the transaction, but not for the transaction header account such as a bank, receivable or payable. For example, you can select a class for the expense account but not the payable when entering a bill. You can have a Profit & Loss with the column by the class report, but not an accurate Balance Sheet by Class.

Consider location instead.

QuickBooks Online Location
QuickBooks Online – Location

QuickBooks introduces the location feature in the Online version to categorise the data from multiple warehouses, branches, or inter-companies. The usage is similar to the class feature, but it affects both header and detail line accounts when a location has tagged. You can prepare column by location for both Profit & Loss and Balance Sheet, which helps the accountant prepare contra during consolidation.

Try location feature if you haven’t done so. Let us know how you managing inter-company billing in QuickBooks Online 🙂

Shall I set up the inter-company receivable as an account receivable type?

An account receivable account adds to the account list when you create a company file in MoneyWorks. The amount owed by the customer, for goods and services sold on credit, get updated in accounts receivable account. Renamed the accounts receivable to trade debtors (or trade receivable) if you prefer to separate trade from non-trade. Then, add other debtors or inter-company receivable to the list for tracking non-trade debtors or subsidiaries.

Accounts receivable
accounts receivable

Each debtor (the name) links to a receivable account. Whether it is a trade, non-trade, or subsidiary, the receivable account field of the name has to tag to an account receivable account to use it in invoices. The ageing process kicks in when an invoice posted.

link subsidiary to an inter-company receivable
link subsidiary to an inter-company receivable

Since a name has to tag to a receivable account, invoices to the subsidiary may have to do it outside the system if the inter-company receivable is a current asset type instead of an account receivable. The function is different, although accounts receivable is part of the current assets category. It is workable, but maintain the outstanding in foreign currency may be time-consuming.

You can set the bank, accounts receivable, and accounts payable with a foreign currency. These accounts get revaluated once new exchange rate entered. If inter-company receivable has set up as a current asset type; then, the exchange gains or losses have to record via a general journal if the outstanding is in foreign currency. It could be tedious when there are lots of entries.

Invoice subsidiary for expenses paid on behalf

Assume you have paid $10,000 to XYZ supplier, which inclusive of $2,000 worth of services on behalf of your subsidiary ABC.

As mentioned earlier, you can invoice the subsidiary when the name has tagged to a receivable account. Create an invoice to the ABC subsidiary from MoneyWorks for $2,000 and add the expense which you use for paying XYZ supplier at the detail line of the invoice. The invoice posted debit the inter-company receivable and credit expense account, which will then reduce the expense from the original $10,000 to $8,000.

The above example is for illustration, the account used may vary.

Both methods have advantages and shortfall. Consult your accountant and try out on a sample file with your existing data and compare the result before adopting either.

Note: Some accountant may name it as Intercompany or Interco instead of Inter-company.