Me, a Company in QuickBooks?

September 17, 2009 9:13 PM

Does anyone have resources to share for using QuickBooks, rather than a dedicated personal finance application like Quicken, to manage personsal finances?

I own a copy of QuickBooks 2009 Professional Edition and use it to manage, competently but not expertly, the books of a small nonprofit. I'd like to get better at QuickBooks, both to learn more about bookkeeping and to learn more about the application itself -- in order, perhaps, to offer financial services to other clients.

I manage my own not very complicated personal finances in Excel and on paper. I'd like to improve on this by setting up my personal finances as a new "company" in QuickBooks, the better to manage them and the better to learn more about QuickBooks instead of some other personal finance application like Quicken.

Are there great resources to share (print, online) that deal with using QuickBooks as a personal finances manager?

posted by gum to Computers & Internet (1 answer total)

Business and personal accounting generally differ substantially, not only in terms of complexity, but in respect to how tax accounting is performed. Mainly, business accounting packages offer support for accounting concepts like accrual method accounting, depreciation, and share ownership accounting, that are simply not relevant for personal accounting. But, conversely, business packages don't provide much support for personal accounting niceties like trusts, 529 accounts, IRA and Roth accounts, and personal capital gains/loss accounting (basis period support, etc.).

Quicken exists for the millions of personal users looking for a personal money manager, with individual or family tax issue support. QuickBooks exists for the millions of small business owners looking for a basic business accounting system. One is not the other, even if you try to think of your personal finances as a simple cash basis business, because of tax situation support, and the need for double entry accounting on business books, that is, at best, a distortion of personal money management.

But there is nothing stopping you from setting up a test company, like, say, Acme Widgets, to use, fictitiously as a training environment, in QuickBooks. Most people actual do this, to create a "second set" of books for their real company, for use in doing budgeting and in coming to valuations of businesses for sale and merger purposes. The main "humph" in doing this, is that you then have to "drive" the fictitious company regularly with "transactions" so that it builds history and activity through time. And, you have to do period accounting like closes, on time, to keep things working. So, it's best if you do this for a structured time period, as part of a defined syllabus of learning QuickBooks functions.

QuickBooks provides some sample company files for installation, that are optional. If you didn't install them initially, you might want to go back and install them now, as a basis for self-training.
posted by paulsc at 8:30 PM on October 3, 2009