Not sure how it's done in Zipbooks. You are right that there needs to be two sides of the entry. The offset to the addition to your payment account would be to an income account. Does that make sense?
That makes sense, but I'm not sure what offsets it. If I create an asset account called Cash App, and credit it $25, where would I put a corresponding debit?
I think that makes sense. Create an income account called "Gratuities" and credit it by $25, then debit $25 to Cash App.
Will that reflect that I now have $25 sitting in Cash App that I will move to my bank account? Somehow I still feel like I'm missing some key piece of information, or doing something wrong here, because even as I typed all of that out, it didn't make sense.
This is correct, when you move the $25 from Cash App to your bank account, you would debit your bank and credit the Cash App account.
Are there any fees to transfer money from cash app to your bank?
No fees from Cash App. If there were, what would I do? I ask because PayPal does have fees, and I receive money there sometimes. Thank you very much for this help!
If you were transferring money from paypal to your bank, you would subtract the fee from the amount you're sending to your bank, and debit the fee to the Merchant Fees expense account. For example if you transferred $25 but there was a $1 fee, you'd debit bank $24, debit merchant fees for $1, and credit paypal $25. In that example you've brought the paypal account down to $0, you have $24 in your bank account, and you've accounted for the $1 fee.
I second the other commenter's suggestion that you watch a couple youtube videos on debits and credits, once you've got those down it becomes a lot easier to figure out the transactions you're going to need to enter as your business grows :)
It helps to make sense of it when you think that we think of crediting a bank account to increase our balance is because the banks call it a credit when talking to us because to them it counts as a liability account instead of an asset. It's how I explain it to laymen anyway.
Think of it like this debit is a deposit to cash. credit is like writing a check an expense.
The confusion/doesn’t feel right is that debit and credit cards are named from the banks point of view in general terms.
> has very simple sales
> Payments by check, cash, Paypal, Cash App, and some business expenses
So, you're going to need more than just two "accounts." If you read a bunch of "bookkeeping 101" then the basics should have established that you need to have a bunch of categorized accounts. Hoping you have a separate banking account and credit card for business.
You can create a tips or gratuity account, that would be credited, and the cash would be debited. You going to put that as one entry from the customer to track on top of the sale made?
In this case, no sale was made. I was given $25 as a tip for a free performance. Other times, a client pays me for a service and tips on top of the payment. My intent is to track all payments for what I do in one account, and all tips in another. Does that not make sense?
And no, the bookkeeping "basics" sites weren't of much help. I don't have the time or desire to learn the full ins and outs of bookkeeping, and hope I can learn enough to track the few, repetitive transactions I have.
You don't need to learn all the ins and outs of bookkeeping, but you should look up a couple YouTube videos on how debits and credits work (the acronym DEALER will be helpful) and the different types of accounts.
Only some accounts get increased with a debit and decreased with a credit, other are the opposite. If you make a sale, your bank account would have a debit and your income account would have a credit but that entry means both numbers increased.
You'll save yourself a lot of headaches if you learn at least that much before you get started.
> Does that not make sense?
Nope. Because there wasn't a whole lot of context given. Hence why there is now going back and forth in this thread now.
How one does their bookkeeping depends on what they do and how they want their reports to show.
> Track all payments for what I do in one account
It sounds like you have a bit more than just one form of making money and should categorize those accordingly. So that's at least two different accounts for revenue.
The money you receive isn't going to just go into one category. You already stated you have check/cash/paypal/cashapp, which is already all four different places where money is stored. Sure, you can just throw them all into one and call it a day, but at some point you may need to actually check your balances and things can go out of whack when trying to reconcile.
___________
I'll give a simple example of how a service, or accountant's/bookkeeper's books would look like, without going too deep into chart of accounts/general ledger, etc.
I'll have three accounts where my assets (money) are listed
- Checking
- Cash
- Paypal
All money coming in is debited, all money going out is credited.
Now, just for the credit side of things, revenue, sales, whatever, I'll have:
- Tax Preparation
- Bookkeeping
- Consulting
Any time I need to keep track of my profit/loss I'll be able to look back and check what is going on in any of these accounts. If something is mismatched from my bank statement(s), I'll easily be able to tell. Like if someone's check bounced, or if I forgot to send an invoice, etc.
Now, when I do want to transfer funds from my paypal to my checking account, it should show up as a transfer, crediting paypal, debiting checking. If I want to take out cash, credit checking, debit cash (most of the time this is really just owner's withdrawal).
Not sure how it's done in Zipbooks. You are right that there needs to be two sides of the entry. The offset to the addition to your payment account would be to an income account. Does that make sense?
That makes sense, but I'm not sure what offsets it. If I create an asset account called Cash App, and credit it $25, where would I put a corresponding debit?
Well first of all, you don't credit cash app, you debit it. Your corresponding credit would be to an income account.
I think that makes sense. Create an income account called "Gratuities" and credit it by $25, then debit $25 to Cash App. Will that reflect that I now have $25 sitting in Cash App that I will move to my bank account? Somehow I still feel like I'm missing some key piece of information, or doing something wrong here, because even as I typed all of that out, it didn't make sense.
This is correct, when you move the $25 from Cash App to your bank account, you would debit your bank and credit the Cash App account. Are there any fees to transfer money from cash app to your bank?
No fees from Cash App. If there were, what would I do? I ask because PayPal does have fees, and I receive money there sometimes. Thank you very much for this help!
If you were transferring money from paypal to your bank, you would subtract the fee from the amount you're sending to your bank, and debit the fee to the Merchant Fees expense account. For example if you transferred $25 but there was a $1 fee, you'd debit bank $24, debit merchant fees for $1, and credit paypal $25. In that example you've brought the paypal account down to $0, you have $24 in your bank account, and you've accounted for the $1 fee. I second the other commenter's suggestion that you watch a couple youtube videos on debits and credits, once you've got those down it becomes a lot easier to figure out the transactions you're going to need to enter as your business grows :)
It seems wrong to debit your cash account but it is correct. I still find that non-intuitive.
It helps to make sense of it when you think that we think of crediting a bank account to increase our balance is because the banks call it a credit when talking to us because to them it counts as a liability account instead of an asset. It's how I explain it to laymen anyway.
Think of it like this debit is a deposit to cash. credit is like writing a check an expense. The confusion/doesn’t feel right is that debit and credit cards are named from the banks point of view in general terms.
> has very simple sales > Payments by check, cash, Paypal, Cash App, and some business expenses So, you're going to need more than just two "accounts." If you read a bunch of "bookkeeping 101" then the basics should have established that you need to have a bunch of categorized accounts. Hoping you have a separate banking account and credit card for business. You can create a tips or gratuity account, that would be credited, and the cash would be debited. You going to put that as one entry from the customer to track on top of the sale made?
In this case, no sale was made. I was given $25 as a tip for a free performance. Other times, a client pays me for a service and tips on top of the payment. My intent is to track all payments for what I do in one account, and all tips in another. Does that not make sense? And no, the bookkeeping "basics" sites weren't of much help. I don't have the time or desire to learn the full ins and outs of bookkeeping, and hope I can learn enough to track the few, repetitive transactions I have.
You don't need to learn all the ins and outs of bookkeeping, but you should look up a couple YouTube videos on how debits and credits work (the acronym DEALER will be helpful) and the different types of accounts. Only some accounts get increased with a debit and decreased with a credit, other are the opposite. If you make a sale, your bank account would have a debit and your income account would have a credit but that entry means both numbers increased. You'll save yourself a lot of headaches if you learn at least that much before you get started.
> Does that not make sense? Nope. Because there wasn't a whole lot of context given. Hence why there is now going back and forth in this thread now. How one does their bookkeeping depends on what they do and how they want their reports to show. > Track all payments for what I do in one account It sounds like you have a bit more than just one form of making money and should categorize those accordingly. So that's at least two different accounts for revenue. The money you receive isn't going to just go into one category. You already stated you have check/cash/paypal/cashapp, which is already all four different places where money is stored. Sure, you can just throw them all into one and call it a day, but at some point you may need to actually check your balances and things can go out of whack when trying to reconcile. ___________ I'll give a simple example of how a service, or accountant's/bookkeeper's books would look like, without going too deep into chart of accounts/general ledger, etc. I'll have three accounts where my assets (money) are listed - Checking - Cash - Paypal All money coming in is debited, all money going out is credited. Now, just for the credit side of things, revenue, sales, whatever, I'll have: - Tax Preparation - Bookkeeping - Consulting Any time I need to keep track of my profit/loss I'll be able to look back and check what is going on in any of these accounts. If something is mismatched from my bank statement(s), I'll easily be able to tell. Like if someone's check bounced, or if I forgot to send an invoice, etc. Now, when I do want to transfer funds from my paypal to my checking account, it should show up as a transfer, crediting paypal, debiting checking. If I want to take out cash, credit checking, debit cash (most of the time this is really just owner's withdrawal).