<p dir="ltr">I don't know how it used to be, but at least when I set up my corporation in the Payroll and state tax systems, I had to make personal guarantees. That said, I am happy to accept that (relatively minor) liability in exchange for the protection offered by corporate limited liability.</p>
<p dir="ltr">That is, no matter who runs the reports and pays the bills, I am personally "on the hook" for that liability. </p>
<div class="gmail_quote">On Aug 1, 2012 10:45 AM, "Lightner, Jeff" <<a href="mailto:JLightner@water.com">JLightner@water.com</a>> wrote:<br type="attribution"><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
Double entry makes a lot of sense especially because it lets you know when you're out of balance when DRs and CRs don't equal the same thing. People were often mystified when I'd go on a "penny hunt". They would say things like "if it's only a penny does it matter?" I'd have to explain that if it was only APPARENTLY a penny it could in fact be 1,523,697.01 off in one account and 1,523,697.00 off in another. Until they balance you can't be sure.<br>
<br>
Of course the argument could be made that if everything does balance you might actually be off 1,523,697.00 in a debit and the same amount in a credit. That is true enough but somewhat beside the point. Double entry accounting is about trying to be insure you're making equivalent DRs and CRs not about insuring you've made then in the right places. The rest of accounting is about making them in the right places. Besides which, only an apostate would make that argument. :-)<br>
<br>
Rules are sometimes important to know. Years ago I had gone to a Georgia Sales and Use Tax training seminar and found out for the first time about estimated sales tax requirements for business collecting over a certain amount. I was the one preparing the monthly return so on doing it the next month I did the estimate and remitted the payment. A senior manager who had previously been Controller noticed that the Sales Tax liability account was lower than it had usually been at EOM and on asking me about it and hearing my explanation said "You can't decide to pay that by yourself." However, he'd subscribed to CCH when he was controller and forced me to read much of what they sent when he'd been my boss. The one message that came through loud and clear in most of the court cases I read about tax law what that if you had the physical ability to make a tax payment (e.g. access to checks, signing authority etc...) you had a personal liability for that tax payment and could never use "I was ordered not to pay" as an excuse. I advised this senior manager "I couldn't decide NOT to pay that by myself however if YOU would like to start doing the monthly return yourself I'm willing to let you assume the responsibility." He never said another word about tax payments to me.<br>
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-----Original Message-----<br>
From: <a href="mailto:ale-bounces@ale.org">ale-bounces@ale.org</a> [mailto:<a href="mailto:ale-bounces@ale.org">ale-bounces@ale.org</a>] On Behalf Of <a href="mailto:mike@trausch.us">mike@trausch.us</a><br>
Sent: Wednesday, August 01, 2012 10:15 AM<br>
To: <a href="mailto:ale@ale.org">ale@ale.org</a><br>
Subject: Re: [ale] GnuCash [OT]<br>
<br>
On 08/01/2012 09:18 AM, JD wrote:<br>
> When I was forced to deal with accounting, I found that it didn't make<br>
> sense - the rules seemed arbitrary to me and simply needed to be<br>
> memorized since a general rule wouldn't work 100%. There wasn't any<br>
> logic. I still feel that way.<br>
<br>
There are quite a few rules. But when you stray from them, the reason for them often becomes clear. For the most part, accounting rules and generally-accepted accounting practices exist so that the books of companies are comparable between multiple different entities. It is one of many systems of rules that help people to make informed decisions about a company's financial status.<br>
<br>
> My companies pay an accountant and I keep the unofficial company<br>
> records inside Quicken (running under WINE). I can track a check book<br>
> register without issues and assign categories too. ;) The doubt entry<br>
> stuff seemed like 2x more work than is necessary for a small business.<br>
<br>
DAC (double-entry accounting) makes a lot of sense, though it can be (when done manually) very mundane. The rule is that for every debit there must be a matching credit, right? This makes it so that the entire system balances. But then sometimes people wonder "If the whole thing balances, and if for every debit there must be an equal credit, how do you record new transactions?". Easy enough; for example, when you run payroll, you accrue a liability (actually, more than one liability), which you record both in expense and in accounts payable.<br>
It is an expense, because you had to pay in order to have your employee, and it is a liability (in A/P) because you haven't paid it yet, but you definitely owe it.<br>
<br>
Then when you actually pay it, you credit your asset account from which you paid it, and debit the liability (A/P) to indicate that it has been paid. The whole system allows you to "follow" the money so that you can see where it went, and hopefully why.<br>
<br>
The process of recording the transactions doesn't have to be as manual as even GC makes it, though. It can be mostly hidden under an interface that "knows" the procedures for taking business events and turning them into accounting transactions. That's what I eventually plan to have for this business' accounting system. Whether or not I can (read: will have time to) make it generalizable for others is TBD.<br>
<br>
> I'm certain this shows my ignorance. That's fine. We can't know and<br>
> understand everything.<br>
<br>
Of course not. Nobody's perfect! :-D<br>
<br>
> I've tried to get our accountants to encrypt emails to us. They don't<br>
> "get it" either. We always send them encrypted data. I'm fairly<br>
> certain our data is not secure on their computer systems, but that is<br>
> probably an issue at all but the largest accounting companies.<br>
<br>
Yes... I know the feeling quite well. I am trying to see if I can't get my payroll people to learn how to securely conduct business. They currently send me everything in plaintext email, which makes me cringe every single time that I get a payroll run finished. I can't get them to understand that email is not an inherently secure format for doing things.<br>
<br>
Personally, I would prefer to have a notification transmitted by email, so that I can go to their (TLS enabled) Web site and pick up my payroll documents and reports. That would be far better. I think that they, and their other customers, see it as unnecessary and extra hassle.<br>
<br>
--- Mike<br>
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--<br>
A man who reasons deliberately, manages it better after studying Logic than he could before, if he is sincere about it and has common sense.<br>
--- Carveth Read, “Logic”<br>
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