Blog Post
HAL9000
8 years agoExperienced User
Thanks JulieAC et al.
This is all rather a bit complex for the likes of me. I think that in following the tutorial, what I've done is make things more complex than MYOB really "needs" them to be, and even following Julie and Duncan's methods may be more than I need.
Please let me know if you feel this simpler idea might work? Please note: for anyone reading this post - WHAT FOLLOWS BELOW IS NOT ADVICE - it's merely asking the question as to whether the method I'm suggesting might work...
As far as my accountant is concerned, he gets all the info he needs from my financial adviser, so he's not relying on MYOB to see what shares I've purchased, when, or how many; and as far as MYOB is concerned, all it needs to do is account for overall purchases, sales and income - MYOB doesn't really need to "care" about which shares I'm purchasing (eg Woolworths, ANZ or whatever) or how many. All it needs to do is make sure the books balance.
Purchasing shares isn't really an 'expense' as such - and I believe that the reason MYOB thinks my business has made a loss equal to the value of shares purchased, is because using the tutorial, it's been treating them as an expense, rather than as an investment.
So rather than accounting for share purchases via an expense account, or via an item purchase, perhaps they should be accounted for just as a regular asset account?
I would setup a new 'Other Asset' account (in my case these are in the range 1-2000 to 1-2999) and call it 'Shares'.
Whenever I buy shares, I would do a transfer from my share trading account (which is a regular Bank account) to 'Shares'.
This way, 'the money stays in the company', rather than appearing on the P&L as a loss.
Whenever I sell shares, I would do a transfer back from my 'Shares' account to my bank account.
The Shares account doesn't care about the changing value of the stock from day to day, so likewise, it shouldn't be concerned that the price I sold a stock for was different to the price originally paid. But I'm not sure how to account for the profit/loss on share sales using this method?
I both cases, brokerage can be accounted for as an expense, and I would setup a separate expense account for that under 'Misc Expenses' (which in my case is in the range 6-1200 to 6-1299).
Income from Dividends would be accounted for in the same way as I currently do, which is via an 'Other Income' account called 'Dividends'.
What do you think, is this too simplistic?