[Jewelry making - Article 00503] - Re: [Orchid] Bookkeeping

[Sam Patania]

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    David, this is an area I got into real trouble with my accountant
    in. The reason is that when I got my MYOB program, I had the
    consultants who sold me the program set it up with the chart 
    accounts which was already horribly outdated. 

    The way I would have some one set up their program is to go to your
    accountant and ask them what they want to work with, have them be
    your consultant. This will save so much time on the back end, when
    tax time arrives. This eliminates the need for them to unscramble (
    at their hourly rate) your set of books. The one hour spent with the
    accountant will save many hours over the next few years and maybe as
    long as you have a working relationship with that accountant. 

    None of us in Orchid land can tell you what specific accounts your
    business will need. We can give a framework. 

    Tools can fall into at least 2 categories, depreciable and one of
    your cost of sales accounts as they are used up. Any large tool
    purchase can and should be depreciated ( an asset) . 

    Any purchase of gas would be in the cost of sales area, it is used
    up as so you have sales or you create inventory. 

    Inventory is an asset account. 

    Each job can be timed and weighed for the basic Time plus Materials
    formula necessary for costing. I did this with production items over
    a period of time, that is doing a time study. This gave me a real
    objective handle on how much time it takes for a particular project.
    For one of work, an open ended estimate or experience will usually
    get me by, I still make mistakes in this area though. Usually to my
    detriment. 

    I use a starting inventory and ending inventory for the tax period.
    This is taken by a physical count periodically and entered as a
    journal entry. During the inventory period I take a physical work in
    process count also as well as stones and metal( by weight). The
    stones I have priced per piece or by the carat, the metal I use the
    current spot price to derive the dollar figure and average it out
    over metal forms ( sheet is less than tri-wire). Scrap is weighed
    also. 

    This whole thing gets so complicated so quickly that I cannot look
    at it separately, it needs to be done like I do math, on paper or
    spreadsheets and in front of me or I screw it up. I can post my chart
    of accounts if you want. 

Sam Patania, Tucson



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