See also How to PDF document #259
There are a several options from which to choose when you want to set aside some of the owner’s money for future expenditures. Set aside is defined as "don’t spend it on anything but xxxx."
1. The owner wants no distribution checks
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Go to Profiles, Owner Profile, Advanced Scheduling speedbutton, Distribution Check tab. Unmark the Ignore Scheduling checkbox and set the Schedule to Never.
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On the Checks and Distributions tab, increase the Base Reserve amount to the amount you want to hold and not use for invoices.
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2. The owner gives you money to spend on a specific future expense.
a.
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In the Owner Profile, Checks and Statements tab, set the Base Reserve amount to the amount that needs to be protected and mark the Enforce Base checkbox. Increase it whenever additional funds are received.
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OR
b. In the Owner Profile under Advanced Scheduling, you can increase the Distribution Reserve monthly by a set amount. See Help document R-763 Base and Distribution Reserves.
OR
c.
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Establish a liability account to hold the money until you are ready to use it.
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This requires setting up 3 account codes.
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The first would have an account type of Expense and would have a description such as Set Aside for Taxes.
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The second would have an account type of Current Liability and a description such as Tax Reserves. Mark the Impound checkbox.
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The third would have an account type of Expense and a description of Pay Taxes. This account code would also need a Bill Code pointing to it.
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Then do a Journal Voucher or set up a Recurring Journal Entry to be run each month through the GL, Scheduled Journal Entries function.
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Line 1
Account - Set Aside for Taxes
Amount - Debit the dollar amount
Line 2
Account – Tax Reserves
Amount - Credit the dollar amount
When you go into the General Ledger History, the money will no longer be in the owner’s balance but in the Liabilities box and will not be available for writing checks.
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When you are ready to use those funds to pay a bill, you must post an offsetting entry moving the money out of the liability account and back into the owner’s available funds. To determine how much is in the Tax Set Aside account, run a balance sheet for the owner under Reports, Ledger Reports. Then do a Journal Voucher:
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Line 1
Account - Set Aside for Taxes
Amount - Debit - enter a negative dollar amount
Line 2
Account – Tax Reserves
Amount - Credit - enter a negative dollar amount
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To pay the bill, write a Single Check using the Bill Code Pay Taxes created above.
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Note that the difference between a) and b) above is the balance showing on an owner statement. In a) the full balance is shown while in b) the balance minus the Set Aside amount is shown (unless the summary style in the owner statement profile is set to YTD Cash Flow Statement).
c. Enter a work order with an amount in the Estimate field equal to what you want to withhold. That amount will be held back from a distribution check. When you are ready to use the money, either convert the work order into an invoice or change the Status to Resolved.
d. Enter an invoice for the amount you want to hold back. Mark the Hold checkbox. The invoice will be skipped when you compile AP, Scheduled Payables, Invoice Checks and will be withheld from distribution check. When you are ready to use the funds either unmark the Hold checkbox or void the invoice and enter a new one for the right amount.
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