[GNC] Customer Invoice Ledger Entries (Debits & Credits) for Freelancers?

[Clint Chaplin]

More formally, GnuCash seems to account using accrual basis, while an
individual tends to account using cash basis?

On Thu, Jun 17, 2021 at 4:09 PM GrantSRobertson <grantsr at gmail.com> wrote:

> When entering a customer invoice, it appears that the only balancing
> accounts
> (the non-Accounts-Receivable accounts) GnuCash will allow one to choose
> from
> are income accounts and certain,  non-special, liability accounts.
> Normally,
> this would be just fine for a business accounting system because businesses
> accrue their income when it is earned. However, individuals (such as
> freelancers) accrue their income only after it is paid. Therefore, if I am
> not paid for months (it happens), then all my tax calculations will be off
> because I will be paying taxes on income earned (the business way) instead
> of only on income paid (the individual's way).
>
> If I had complete control, I would assign an Equity:Pending_Income account
> as the balancing account, to show that I had "equity" but not income, up
> until the time I actually get paid. Then, after I get paid, I would
> manually
> transfer that money from that special Equity:Pending_Income account to an
> appropriate income account. I recognize that when applying a payment to a
> customer invoice, the only ledger entries made are the transfer from the
> Assets:Accounts-Receivable account to the Assets:Whatever_Banking_Account
> account. So, any other transfers/ledger-entries would need to be made by
> hand.
>
> However, because the above is not possible, I am looking for other
> alternatives.
>
> My first thought is to simply introduce another level to the income
> accounts
> hierarchy. Something like:
>
> Income:Pending
> Income:Paid   (placeholder)
>                   :<all the other accounts normally under income>
>
> I would still have to manually create a separate ledger entry to transfer
> money from the Income:Pending account to the actual income account it
> belongs in.
>
> And, I would then have to figure out how to generate reports that ONLY
> reported income from under the Income:Paid placeholder parent account.
> Would
> that be too very difficult? Or would I just be creating an ever-increasing
> amount of compounding complexity to my accounting workflow?
>
> In the end, it seems GnuCash is not really designed for freelancers yet.
> All
> assumptions are that one is operating as a business with paid employees. It
> seems to me, to achieve the most flexibility, GnuCash should allow users to
> custom configure the behavior of the invoice and payment features, to allow
> us to automatically do whatever transfers and ledger entries we see fit to
> achieve the intended goal.
>
>
>
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-- 
Clint (JOATMON) Chaplin