cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Anonymous
Not applicable

How deep do your sub-accounts go?

How many sub-accounts do you typically have per parent account?

 

Does tracking more detail with multiple sub-accounts make a significant, positive difference for your bookkeeping process?

 

8 Comments
Highlighted
Level 15

How deep do your sub-accounts go?


@Anonymous wrote:

How many sub-accounts do you typically have per parent account? one level

 

Does tracking more detail with multiple sub-accounts make a significant, positive difference for your bookkeeping process? Of Course, else why bother?

 


 

Highlighted
Anonymous
Not applicable

How deep do your sub-accounts go?

@Rustler

 

Any advantage to having 2 or 3 levels? Off the top of my head, you might go deep for various utility expense accounts. 

 

Then again, fewer is better. 

Highlighted
Level 15

How deep do your sub-accounts go?


@Anonymous wrote:

@Rustler

 

Any advantage to having 2 or 3 levels? Off the top of my head, you might go deep for various utility expense accounts. 

 

Then again, fewer is better. 


For your example I can not see it, ie

Utility exp

>>elect exp
>>water exp
>>gas exp
>>internet exp

Not saying someone does not have more than one level, but I can not see it myself

Highlighted
Anonymous
Not applicable

How deep do your sub-accounts go?

@Rustler, would you mix expenses in the same sub-account if, say, you switched to a different utility (maybe not by choice) halfway through the year?

Highlighted
Level 15

How deep do your sub-accounts go?

The account is what you are paying for

who you pay is the vendor, and it makes no difference who supplies what you pay for

Highlighted
Level 3

How deep do your sub-accounts go?

For majority of small business one level is enough and only for accounts that make sense like the utility account and that's only it the owner wants to see the subaccounts.  At the end of the year on the tax return only the total utilities are reported and not the sub accounts.  Subaccounts make the P&L unnecessarily long and bulky, in any case if the owner wants to see the details behind any account you could always drill into that account and sum up by vendor and you get the same result...

Highlighted
Level 15

How deep do your sub-accounts go?


@Eugene Shestakov wrote:

For majority of small business one level is enough and only for accounts that make sense like the utility account and that's only it the owner wants to see the subaccounts.  At the end of the year on the tax return only the total utilities are reported and not the sub accounts.  Subaccounts make the P&L unnecessarily long and bulky, in any case if the owner wants to see the details behind any account you could always drill into that account and sum up by vendor and you get the same result...


True that the owner could drill down and get reports, truth is though we just do not have the time or the inclination to do so.  Using sub accounts per utility allows for a quick and dirty look at total expense, running an account quick report allows us to see the monthly increases - a sudden jump means there is a problem.

 

Using an item on a utility bill, rather than posting directly to the account, takes a few seconds more, but the information available is even better, since I can enter qty and total and watch my usage via an item quick report, and/or look at the sub account for overall expense.

 

How long a P&L or balance sheet is, as an owner I do not care, paper is cheap, pdf is easy to scroll, and a good reporting function will allow for parent/sub accounts to be collapsed. 

 

As an owner what I want is information at my finger tips, easy to get and easy to understand - and more importantly I want the information I want, not some standard or custom accounting report.

Highlighted
Level 3

How deep do your sub-accounts go?

Hey @Rustler, definitely valid points and I understand where you coming from owners need detailed financial information about their companies to an extent. Allow me to specify what I meant, business owners can create sub accounts and they are useful in most cases if the size of their business allows that. I had done many cleanups for clients and here's a few examples of companies that I worked on. This company made around 35 million in sales, they had an onsite bookkeeper that claimed she knows what she was doing, when we received their file the P&L was 25 pages long due to the fact that she created sub accounts of accounts and subaccounts for sub accounts for most of the accounts. Majority of the sub accounts were completely unnecessary so we ended up working long hours with the CFO to condense their P&L and BS to an appropriate size, P&L to about 4 or 5 pages and BS to 2 or 3 pages don't remember exactly. Another company much smaller was grossing under 1 Million, their bookkeeper had a bunch of sub accounts the P&L was about 6 pages long, we went in and condensed to just 2 pages I believe. Mind that I was also the tax preparer for these corps so my point is that sub accounts are great but they can also create a mess of the books. The accountant should be the primary judge of how the books should be constructed and advise the business owner on the best accounting practices to come to an agreement and get to work, small changes could always be made in the future to satisfy the client's needs. 

Sorry for not expanding too much on this being that I'm typing this up on my phone.

Need to get in touch?

Contact us