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Level 1

Setting up Chart of Accounts

I run an entertainment planning and productions company - We exclusively sell services (we don't sell any products). I just got rid of our bookkeeper who really messed a lot of things up and I want to consider creating brand new chart of accounts better suited for our business.

 

We are setup as an LLC and there are 2 partners (though soon will be just one, and used to be 3). We book entertainment for private events mostly, and we staff independent contractors to perform at the events. For example, we sign a contract with a client for a wedding band. We staff each musician on our own and pay them and issue 1099 at tax time. We also rent items like arcade games, lights, and sound systems and, again, we hire people to staff/run those things during the events. 

 

What would be the most logical way to setup the accounts? What are other factors I should consider, other than the info above, when determining the optimal setup of accounts? 

 

We accept payment via check and ACH via Quickbooks. We occasionally accept credit cards and we take a deposit at signing, and full balance at later date. 

 

Thanks for any help!

2 Comments 2
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Level 15

Setting up Chart of Accounts

We are setup as an LLC and there are 2 partners (though soon will be just one, and used to be 3

LLC is not a business type, if there were 2 or 3 partners then it was a partnership with a written agreement registered with the state. If the business changes to a single owner - that means the partnership has to file a final income tax return, and close down. Then the remaining person starts a new company as a sole proprietor.
You need, need to get with a tax accountant on this issue.

chart of accounts is a different thing, the chart of accounts IMO should mimic the tax form the company files, and you create sub accounts for detail where you want it.

An account is not what you do, the account records the amount you made or paid for that type of thing. In QB items in the products & services is what you do, and each item links to an account that gets posted to.

QB is not suited for renting.

Highlighted
Level 3

Setting up Chart of Accounts

My suggestion is that you get a qualified bookkeeper or CPA to do your bookkeeping and accounting. You have a lot going on and if you are looking for useful financial reports from your Qbks, for business decision purposes, you want assurance that the entries are correct. Garbage in, garbage out. As it sounds like you learned with the previous bookkeeper.

 

You DO sell "products." Your description of "renting the games" at these events is RETAILING. It is NOT a service.

 

Again, my best advice is for you to develop a relationship with a local CPA for bookkeeping and tax advice. As previously mentioned, your Partnership will cease being a partnership when only one partner remains. There are legal steps to notify the state and feds that the partnership is dissolved. A completely NEW company must be formed. Not saying you can't use the same name.

 

Contact a local professional. PLEASE! Best of luck! Sounds like you have a fun company.

 

 

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