 zero accounting software 2023 bank rules same vendor to accounts filtered by amount get ready to become an accountant hero with zero 2023 here we are in our custom zero home page going into the company file we set up in a prior presentation the bank feed file let's duplicate those tabs to put the reports in like we do every time right clicking on that tab up top so we can duplicate it and then we will right click again and duplicate again let's go back to the tab to the middle accounting drop down open up the balance sheet report tab into the right accounting drop down this time of course the income statement sometimes called the profit and the loss I just call it profit because I have no losses man losses aren't a thing I don't I manifest my destiny by not thinking about losses I only manifest profits anyways 2022 by going to the end tab date 2022 the 31st and update it so there we have it let's go on to the first tab now and go to our bank feed information accounting drop down we've got the bank accounts that's where our bank feed stuff is we're going into the checking account we've updated information to our checking account we're in the reconcile tab we're doing our best to try to construct everything we can from the bank feed so the stuff comes in from the bank feeds and we're creating the transactions from the bank feeds we're looking at some more complex rules most of the time the rules are pretty straightforward we paid the telephone bill so we've we assigned Verizon to the telephone expense straightforward but sometimes they could be a little bit more confusing this time we want to look at a little bit more nuanced rule around whether or not we've record something as say supplies or whether we're going to record it as an asset a fixed asset so office depot for example any kind of any kind of home depot type of store this could be the case because we might be purchasing a whole bunch of stuff mainly supplies from it but sometimes we might be purchasing equipment from it and we want to be able to set up a rule that can distinguish or at least give us an indication as to whether we might have to record something a little bit differently so here's like like office depot here and then we've got some other office depots and some more expensive stuff that we purchase from office depot on the second page so let's think about this in the general conceptual format if I go to my balance sheet here note there obviously the checking accounts going down most of the time we're going to go to the income statement and just record it as an expense of supplies because that's what we normally purchase from let's say office depot but sometimes we might purchase something that we have to categorize as an asset now this is one of those areas where even if you're a small company you often have to deviate from a cash-based system you might say well I don't want to I don't want to deviate from a cash-based system I don't care if I bought like a you know $10,000 piece of equipment I want to purchase I paid cash for it I want to just reduce the or record it as an expense but if you're in the United States at least you might have to deal with taxes and the tax code even for small businesses is going to force you to put it on the books as an asset and then to depreciate it so you want to make sure you're in compliance at least for that reason and obviously just from a conceptual framework it makes sense to put something on the books as an asset if it's a large purchase even if paid cash because if for example you purchased a $50,000 piece of equipment for cash and you expensed it in January and then you tried to compare your January and February income statements you would have this $50,000 supplies expense in January and very little supplies expense in February and it would make it look like you had a bad January which isn't the purpose of the income statement in general the purpose of the income statement is to try to measure performance over time and what really happened is you purchased a $50,000 thing that you're going to be using multiple periods into the future so that's why we want to put it on the books as an asset and then allocate the cost over the timeframe that we're going to use it that's that a cruel kind of concept so as we do this also just realize that on the balance sheet if you put things into the equipment account you want to make sure that you're kind of lined up with whatever your sub ledger will be used to track the equipment for the depreciation and accumulated depreciation often done in the United States by external software such as tax software due to the fact that even small businesses are going to have to do their taxes and you're going to have to put this into the tax software anyways and depreciated on a tax basis so you might as well use that same tax software to calculate your book basis as well whether or not your book basis is simply going to be on a tax basis or whether you're going to have two different basis in the United States of tax basis and a book basis so you want to talk to your accountant or tax professional or whatever software that you're going to be using to see what account categories they have in their depreciation sub ledgers so you can line up your accounts here for things that you're purchasing to the sub ledgers also just realize that when you purchase equipment you might sometimes be having a loan related to the equipment so now you might put a down payment on the equipment you might finance the rest of the equipment and then you have a loan now there's three accounts affected now that could be a little bit confusing when you're putting a loan on the books as you purchase equipment and using the bank feeds just from a bookkeeping perspective so a couple different ways you could deal with that you could see the loan come through from the bookkeeping perspective and put it on the books track the loan with an amortization schedule and so on or possibly you could try to keep everything as much as possible on a cash based system or at least a system that you can automate with zero keeping all the documentation for loans as well as the equipment purchases to then have adjusting entries possibly at the end of the year done by your tax professional or CPA firm or accountant at that point in time in that case you could just say I'm just going to record that money that I paid in the equipment asset I'm going to save all the documentation so at the end of the year the accountant can shore up the loan the loan balance and all that kind of stuff all the payments I make on the loan I'm just going to record to a loan account instead of breaking out the interest so that I can automate my system with the bank feeds and then give all this documentation to my accountant at the end of the year that can shore up the information entering the proper transaction for the equipment taking into consideration the loan breaking out the interest portion of the loan and breaking out short-term and long-term loan account if necessary okay so let's go back to the first account we're really just kind of focused on the bank rule we're going to come up with an arbitrary rule here saying hey if it's below a thousand dollars just expense it now that thousand dollar limit is kind of arbitrary because we're just picking a number in theory if you're using something for more than a year you should put on the books as an asset but in practice of course it's kind of in material under a certain dollar amount so you can pick whatever dollar amount you think is appropriate I'm going to choose a thousand dollars right so I'm going to say all right let's create a rule and this is the office so it's going to be any conditions match I'm going to say that all conditions have to match now and I'm going to say that it has to have a description that contains or let's do let's do the bank the any text so the normal thing is if it contains office depot that's just like normal and you also have to have this rule met that the amount is below is less than the amount has to be less than a thousand dollars if it's less than a thousand dollars we're just going to write it off to an expense if it's more than a thousand dollars and it's office depot don't apply this rule because we might have to put it on the books