Account

An account in ContactsLaw is equivalent to its namesake in double-entry accounting, where transactions are posted to accounts to impact their balances. Each transaction line item debits one account and credits another for the same amount, ensuring that the sum of all account balances remains zero.

Properties

Accounts have the following properties:

• Chart of accounts on which the account appears (general or trust/controlled money)
• Description and code shown on transactions, ledgers and reports
• Optional category
• Purpose for which the account is used (including by the system)
• Account type (asset, liability, income, expense or owner's equity)
• Sub-type (e.g. current/non-current or deductible/non-deductible)
• Sales tax (GST) mode (affects transactions)
• Related contact
• Whether the account is enabled (new transactions allowed)
• Whether the account is reconcilable
• Whether the account is reportable (for tax purposes)
• Whether the account is for internal use only (excluded from reports)

Depending on its purpose, an account may have additional properties; e.g. bank account details.

Chart of Accounts

In ContactsLaw, a chart of accounts is the term given for a set of accounts for a particular business and the type of accounting for which it is used.

This can be either:

• General - For general-purpose banking, sales, expenses, salary/wages, tax, etc.
• Trust/Controlled Money - For operating trust or controlled money accounts where funds are held on behalf of clients.

This determines the types of transactions that can be recorded, as well as the reports that can be generated. For example, a Profit & Loss report can only be generated for the general chart of accounts, whereas a Register of Controlled Money can only be generated for the trust chart of accounts.

Account Codes

In addition to its descriptive name, each account is assigned a code comprising a sequential number and a single letter indicating its type (A, L, I, E or O). For example, a credit card account may be assigned the code 0023-L (23rd account created, liability account).

Account codes cannot be changed, except for the suffix (if the type changes).

Purposes

Accounts do not necessarily require a purpose; however you may wish to assign one if the account has special properties or needs to be recognised by the system (e.g. disbursement transactions require an account whose purpose is "Disbursements").

You can choose from the following purposes:

• Retained earnings - To support end-of-year rollover functionality.
• Merchant fees - To separate fees from income when operating a credit card facility.
• Suspense - For recording corrective transactions.
• Cash
  • Bank account - Stores additional details for a bank account belonging to the business.
  • Credit card - Stores additional details for a credit card belonging to the business.
  • Escrow account - For receiving funds from an escrow service, e.g. PayPal, Square.
  • Credit card merchant - For operating a credit card facility.
  • Petty cash
• Sales and purchases
  • Accounts payable (Creditors)
  • Accounts receivable (Debtors)
• Billing
  • Disbursements - To enable recording and billing of disbursements (cash/non-cash).
  • Professional services - For billing products.
  • Other invoice items - For billing other items.
  • Discounts
  • Interest - For charging interest on overdue invoices.
  • Debt written off - For writing off bad debts.
  • Disbursements written off - For writing off disbursements that will never be billed.
• Tax
  • Provision for sales tax (GST) - For forecasting sales tax liability when the business operates on a cash basis.
  • Sales tax (Goods and Services Tax) - For recording actual sales tax liability.
  • Tax running balance (ATO integrated client account) - For recording BAS/PAYG account activity.

Sales Tax (GST) Modes

The sales tax mode determines whether/how tax is calculated when the account appears on a line item in a transaction:

• Suggested - Sales tax may be deducted from the amount debited/credited to the account and the amount is calculated according to the current tax rate.
• Not suggested - Sales tax may be deducted from the amount debited/credited to the account, but the amount is not calculated and defaults to $0.
• Prohibited - Sales tax must not be deducted from the amount debited/credited to the account.

Accounts belonging to the trust/controlled money chart of accounts must always prohibit sales tax.

Capital/Non-Capital Assets

See also: Sales Tax (GST) Report

Asset accounts can additionally be marked as either capital or non-capital.

ContactsLaw considers any transaction which credits a cash account (or Accounts Payable aka creditors) and debits a capital asset to be a capital purchase for tax purposes. Likewise, transactions which credit a cash account and debit a non-capital asset are considered to be non-capital purchases.

This distinction affects the sales tax (GST) reports. There is no other way to affect the classification of a purchase transaction, so care must be taken to set up accounts correctly and use the correct types of transactions.