This video is one of the longer ones in our library and explains how to enter purchases into Easy Books. If you're not used to bookkeeping already, you'll need to pause and decide whether what you've bought is an asset or an expense. Then decide whether you'll need a supplier account or not. The video talks about these options and shows how to enter the information.
As a business you'll pay tax based on the profit you've made over the year. Profit is the difference between your total income (or turnover) and the total of all your expenses in the year. Therefore you should enter expenses and keep a record of any receipts. Whether you throw these into a big box or use a more modern system such as scanning into Evernote is up to you.
When entering a purchase in Easy Books there are a couple of questions you should ask yourself. Firstly, is the item you've bought an asset in the business or an expense item? Assets can be sold later and do not affect your profit figure or the value of your business. Expenses reduce the figure shown as your profit and are split into direct and indirect expenses. Essentially direct expenses record the direct costs of making a sale, whereas indirect expenses are for overheads such as insurance, heating costs, advertising and so on.
The second question you should ask is whether you need the purchase linked to the supplier or whether to treat it as a simple cash payment at the point of purchase. If what you've bought is from someone you buy from regularly or if they offer you credit - meaning you can pay later - you should set them up as a supplier account. If it's a one-off purchase where you pay the full amount straight away you should enter it as a cash based transaction from petty cash, a bank account, or credit card.
Starting with the simple case where no supplier account is needed, suppose we pay for some advertising. In this example we're paying Google for an Adwords campaign with an up-front payment of £75 using the company credit card. To enter this into Easy Books, choose Accounts in the main menu followed by Credit Card. Next tap Add a new transaction and fill in the form.
Account 2 is where we classify the expense as an indirect expense called "Advertising".
We now see the credit card has a balance of 75 and so does the "Advertising" expense account. At a later time the credit card will be paid off from the company bank account, entered as another transaction with Account 1 as the bank account and Account 2 as the credit card.
Let's start again now and enter a different purchase, this time using a supplier account. In this example, suppose the business buys batteries in bulk from a supplier called Farnell. The supplier ship the batteries but we don't make a payment until the following month.
We start by tapping Suppliers in the main menu. Since we don't have the supplier listed, we'll add it quickly now.
Tap the supplier followed by Add a new transaction and fill in the form. The Transaction Type is already selected as a purchase. Fill in the date, their invoice number and choose an appropriate expense account.
Note that if the expense account isn't listed, you can add a new one using the plus button at the top instead of going back to the Accounts screen.
When it comes time to pay the supplier, we can do this direct from the purchase or by adding a new transaction manually between the bank account and the supplier.
In this case, it's easier to find the purchase and tap and hold Make payment... which makes the payment in full using the company bank account.
If you enter payments manually from the bank account you may still want Easy Books to show the tick so you can keep track of which invoices you've paid. You can do this by turning on the Fully Paid switch in the purchase.