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How to split profit in accounting

funniezateefunniezatee Member Posts: 2

Hi I am new to wave.

As i and my partner are both in this business and would like to use wave for our accounting. However each of us works on per job basis. Basically if one of us handles the job individually, he gets the profit. And if we both work on the job, we split the profit.
Does wave cater for this scenario?
And was a bit disappointed there was no app to enter accounting info.

Thanks,
Brian

in Accounting Technical Support

Comments

  • MikegMikeg Member Posts: 995 ✭✭✭

    Brian,
    To answer your question, unfortunately Wave cannot do accounting based upon what is sometimes referred to as profit centers. That type of programming is above the free scale. However, where this is a will there is a way.
    First how is this business structured for tax purposes? Are you each removing the profit as a cash payout?
    One way you could account for it is to set up three different sales accounts. Sales - Brian, Sales Brian and Joe and Sales - Joe. On the expense side, your post didn't mention any, so not sure whether you have any or shared costs (overhead). You can always export an income statement to excel and manipulate data from there. Setting up income statements for each sales account.
    Mike G, CPA
    www.mgfinancial.net

    edited April 29, 2019
  • funniezateefunniezatee Member Posts: 2

    Hi Mike,
    there will be no tax in this business.

    How do we go about setting up sales accounts? There will only be both of us.
    We both run the business, and we take the profits depending on who does the job.
    I could not find a user role for "sales".

    The expenses side will be taken from contributed capital, so that is shared equally.
    So only the profit sharing part is the issue, as its not fixed every month, but instead depends on the number of jobs each of us pick up.

    Also, is there really no app for wave? Other than the e-receipts one.
    I tried assessing via mobile browser and its not even mobile friendly.

    Thanks,
    Brian

  • MikegMikeg Member Posts: 995 ✭✭✭

    Brian,
    Sounds to me like you have a partnership for tax purposes. I'm assuming you are in the US. It would require you to file Form 1065. If you are, I would set up a sales account in the chart of accounts for each of you and one for joint. From what you said above, each shares in the operating cost equally. I would use the sales account by partner to determine the payout. You have the option of using a draw (distribution) account to disburse the funds. This would be an equity account on the balance sheet. The second way would be to set it up as a guaranteed payment which is a deduction to the partnership. At year end, your agreement should state that income will be allocated based upon how cash was paid to each partner and expenses are shared equally.
    Hope that helps
    Mike G, CPA
    www.mgfinancial.net

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