Biz & Personal Books Have Now Separated - But Can They Still Talk?

Beanorama

I have a question for the community about how best to use Wave for both business and personal accounting.

As the DIY bookkeeper for my wife and my businesses, I am using and evaluating Wave. I was attracted to it mainly because it's targeting people like me who want to run our business books and our personal finances in one system. As someone who has run our businesses within the same set of books as our personal finances, I very much want separate books for each.

So though I empathize with the author of the post who wants to be able to move a transaction between the business and personal side, I get why that's not possible. So cut-and-paste is the solution there (or if you're really old-skool, reverse-entry and copy).

But the interface between our business and our personal lives is why we're in business. They still need to relate to each other (e.g., draws, infusions; individual-incurred expenses, reimbursement to the individual, etc.).

It would be great if our business books and personal books, though now separated, could at least still "talk" to each other. For every transaction that crosses the interface, there is a related transaction in each of two sets of books - in a double-entry system, that's four entries.

Back in the day we were all excited when software for microcomputers became available, not only to replace our paper ledgers, but also to automate the double-entry accounting: allowing one data-entry event to create the double-entry. (And there were those back then who thought that was accounting-apostasy, but after a few years they got over it.)

So decades later, I had hoped that Wave would have taken the similar next step for this online generation: to allow us to make, in one data-entry event, the four entries needed: two entries each in two sets of books. But I'm not seeing it.

It would seem that draws are the more simple problem. They're not that hard to do manually in each set of books, and if that's the only problem I had, I probably wouldn't be asking. (But it's also probably the easier solution for Wave to implement, too. Just saying.)

The more complicated problem is individual-incurred expenses, both to get the individual reimbursed and, when clients are reimbursing them to the business, to get the documented expenses into the invoices. And each report could have multiple transactions, and each could have multiple splits. Yet even that hoary problem has been solved for decades in other systems. I don't see anything in Wave like a system for expense reporting by individuals to the business.

Is anything like any of this in Wave? If not, who's found a way? Have a workaround? A process or procedure? Maybe even a Zapier or IFTT? Please share!

Charlotte

Hi @Beanorama ! Thank you for taking the time to share your thoughts with us. Really appreciate the insight. It looks like there are four areas to answer so I have broken them down below. Please feel free to follow up on any point if you want to clarify or discuss further with the community. For scenarios 1 and 2 below, I have assumed that the entity structure is a pass-through entity (S-Corp, LLC, sole proprietorship, partnership). Let’s take a look...

1. Tracking business expenses incurred on your personal bank or credit card:

This is the scenario where you made a purchase using a personal bank/cc. For now, if you have made a purchase using a personal account - one that is not linked to your business in Wave - enter a journal transaction as follows:

Debit: Owner Investment / Drawing
Credit: Business Expense (ie; Travel, Meals)

If and when you want to reimburse yourself for that expense, you only need to categorize a transaction into Owner Investment / Drawing.

We’re actually in the process now of designing a much more intuitive flow than before our upgrade took place. To borrow your phrasing, our plan is to make them "talk".

2. Tracking personal expenses incurred on a business bank or credit card:

You can categorize this type of transaction straight into Owner Investment / Drawing without issue.

3. Tracking of business expenses incurred on your employee’s bank or credit card, where you’ll need to reimburse them:

There are numerous ways of doing this depending on how or whether you are running payroll and how many employees need to be reimbursed each month.

One way to do it is to add your employee as a vendor in Wave, and enter their expense report as a Bill. When you have added or imported a transaction that was a payment to your employee, categorize it as “Bill Payment”.

4. Tracking client expenses in order to invoice them for reimbursement:

We have an article posted on how to accomplish this here.

I’m interested in your comment regarding the intersectionality of your business and personal lives. How often do you find yourself entering this type of transaction (specifically in reference to the first two points)? Is this usually incidental or much more regular? You also reference Zapier and IFTTT - is there a particular integration you’re thinking of that you believe would be helpful here?