How to handle Client Deposits in Xero (or any finance software, really)
I haven't worked with Xero before, but can't you just set it up as accounts payable? Put in an accounts payable for the contract. When the client makes a payment, the accounts payable goes down and the cash goes up.
"Xero and WaveAccounting can make things easy, but they also have their limitations. I've used both for short periods of time but found both of them to be lacking. While the ""ease"" is appealing, the ability to drill into the details and get good reports is the downfall of both of these accounting systems. QuickBooks may seem like the easy answer here, but it really is the best for getting the power you want without getting too complicated." This happens to my dad all the time. He requires a deposit up front, but sometimes he'll let people slide without a deposit, or they refuse to pay the balance or something.   After he has called and harrassed them about it, he boxes up the files of people that don't pay and hands it off to a lawyer. He has a deal worked out where he provides the lawyer with all the paperwork and the lawyer gets to keep 20% of whatever he can collect. The rest is just written off.  The key thing is determining how much time and money you want to sink trying to get that money back. You don't know the likelihood of actually collecting that money, and every hour you spend on it is an hour you could spend generating more business "Let's just focus on the ""why would a bank need to accept deposits from private clients part"" and forget the central bank for a moment. I'm a guy. I have a wife and two kids. They have this pesky habit of wanting to buy stuff. When I get paid, I could just get a check, cash it, stuff it under a mattress, and pull it out when I need it. Hey that worked for a long time didn't it? But sometimes it's nice to write checks. (Just kidding, that's so gauche...) I use my debit card. I use my credit cards, but they need to be paid somehow. My light and phone bills need to be paid too. If only there were someone out there who could facilitate this transfer of money between me, the private client and the merchants I'm forced to spend my money at. Now some of those merchants have plans. Light bills I can pay at my grocer if I choose. But most of the other's don't. Luckily I have a bank that's willing to do this, for a fee. So basically they do it because there's a void in the market if they don't. I don't know if it's true what they say about supply creating its own demand, but it certainly is true that demand creates supply!" You could keep an eye on BankSimple perhaps? I think it looks interesting at least... too bad I don't live in the US... They are planning to create an API where you can do everything you can do normally. So when that is released you could probably create your own command-line interface :) Before answering specific question, you are liable to pay tax as per your bracket on the income generated. I work with my partner and currently we transfer all earning on my personal bank account. Can this create any issue for me? If you are paying your partner from your account, you would need to maintain proper paperwork to show the portion of money transferred is not income to you. Alternatively create a join Current Account. Move funds there and then move it to your respective accounts. Which sort off account should be talk and by whose name? Can be any account [Savings/Current]. If you are doing more withdrawls open Current else open Savings. It does not matter on whos name the account is. Paperwork to show income matters from tax point of view. What should we take care while transfering money from freelance site to bank? Nothing specific Is there any other alternative to bank? There is paypal etc. However ultimately it flows into a Bank Account. What are other things to be kept in mind? Keep proper record of actual income of each of you, along with expenses. There are certain expenses you can claim from income, for example laptop, internet, mobile phone etc. Consult a CA he will be able to guide and it does not cost much. "Hello! I am working on a project where I am trying to determine the profit made by a vendor if they hold our funds for 5 days in order to collect the interest on those funds during that period before paying a third party.  Currently I am doing ""Amount x(Fed Funds Rate/365)x5"" but my output seems too low. Any advice?" MoneyDashboard or XeroPersonal  are similar sites to Mint.com  MoneyDashboard is planning on releasing an Android App XeroPersonal is also in development of an Android App  For more details about the differences between the two apps, see this Web App question "Short answer - matching your firms stock record or box to the records of a depository or fund family. Any differences are referred to as ""breaks"" and need to be resolved promptly otherwise action like covering or moving to suspsense are required.   There are rules surrounding suspense, that may be valuable reading.  Let me know if you have any specifics or want more detail. I made a few assumptions but that is the broadest view of a firms asset reconciliation (FINRA passed some recent rules that take this even deeper into ""firm"" accounts)." The best way is for X to work as Independent consultant fro c.com from India by raising monthly invoices for the work done. This will avoid the complications and paperwork associated by registering a LLC in US by XF and then employing X as independent consultant in India. X may need to fill out W8-BEN forms so that there is no withholding in US Edit: Independent consultant means without having to register any legal entity either in India or in US. There are no legal regulations in US or in India to hire an independent contractor / consultant. There maybe internal policy of C.com not to have independent consultants. Payments can be made via transfer to Bank account. My answer is with respect to the United States. I have no idea about India's regulatory environment. You are opening yourself up to massive liabilities and problems if you deposit their money in your account. I managed investment accounts as a private investment advisor for years (those with less than 15 clients were not required to register) until Dodd-Frank changed the rules. Thus you would have to register as an advisor, probably needing to take the series 65 exam (or qualifying some other way, e.g. getting your CFP/CFA/etc...). I used a discount broker/dealer (Scottrade) as the custodian. Here's how it works: Each client's account was their own account, and I had a master account that allowed me to bill their accounts and manage them.  They signed paperwork making me the advisor on their account.  I had very little accounting to handle (aside from tracking basis for taxed accounts). If you take custody of the money, you'll have regulatory obligations. There are always lots of stories in the financial advisor trade publications about advisors who go to jail for screwing their clients. The most common factor: they took custody of the assets. I understand why you want a single account - you want to ensure that each client gets the same results, right? Does each client want the same results?  Certainly the tax situation for each is different, yes?  Perhaps one has gains and wants to take losses in one year, and the other doesn't. If their accounts are managed separately, one can take losses while the other realizes gains to offset other losses. Financial advisors offer these kinds of accounts as Separately Managed Accounts (SMAs). The advisors on these kinds of accounts are mutual funds managers, and they try to match a target portfolio, but they can do things like realize gains or losses for clients if their tax situation would prefer it. You certainly can't let them put retirement accounts into your single account unless the IRS has you on their list of acceptable custodians. I suggest that you familiarize yourself thoroughly with the regulatory environment that you want to operate under. Then, after examining the pros and cons, you should decide which route you want to take.  I think the most direct and feasible route is to pass the Series 65, register as an investment advisor, and find a custodian who will let you manage the assets as the advisor on the account. Real estate is another matter, you should talk to an attorney, not some random guy on the internet (even if he has an MBA and a BS in Real Estate, which I do). This is very much a state law thing. "My wife and I are paid every two weeks. I go on line see the exact deposit, add it to register, and see what checks cleared. In effect, I reconcile twice per month, and the statement can't be different that what their system tells me. Since the online site shows ""last statement balance"" I feel there's no need to bother with the paper, nothing left to reconcile." It is possible that they only do the hold on the first deposit from a given source. It is probably worth asking if they intend to do the hold on every paycheck or just the first one. "This may be closed as not quite PF, but really ""startup"" as it's a business question.  In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit." No, GnuCash doesn't specifically provide a partner cash basis report/function. However, GnuCash reports are fairly easy to write. If the data was readily available in your accounts it shouldn't be too hard to create a cash basis report. The account setup is so flexible, you might actually be able to create accounts for each partner, and, using standard dual-entry accounting, always debit and credit these accounts so the actual cash basis of each partner is shown and updated with every transaction. I used GnuCash for many years to manage my personal finances and those of my business (sole proprietorship). It really shines for data integrity (I never lost data), customer management (decent UI for managing multiple clients and business partners) and customer invoice generation (they look pretty). I found the user interface ugly and cumbersome. GnuCash doesn't integrate cleanly with banks in the US. It's possible to import data, but the process is very clunky and error-prone. Apparently you can make bank transactions right from GnuCash if you live in Europe. Another very important limitation of GnuCash to be aware of: only one user at a time. Period. If this is important to you, don't use GnuCash. To really use GnuCash effectively, you probably have to be an actual accountant. I studied dual-entry accounting a bit while using GnuCash. Dual-entry accounting in GnuCash is a pain in the butt. Accurately recording certain types of transactions (like stock buys/sells) requires fiddling with complicated split transactions. I agree with Mariette: hire a pro. "If you just had one expense once a year of $1200, you would put in $100 a month. The average balance is going to be $600 in that case - the 0 and $1200 months average to $600, as do the $100 and $1100, the $200 and $1000, and so on. If you had one expense twice a year of $600 and put in $100 per month it will average to $300. You have a mix of 3/6/12 months - does 8 months seem reasonable as an ""average"" frequency? If so, there should be about a 4 month slush all the time. Now instead of one expense averaged over 12 months, imagine 12 accounts, each needing $100 a month. If you started at zero, you would put in $1200 the first month and immediately spend it. One account would go from +100 (its share of what you put in) to -1100 while the rest are all at +100. Overall your balance would be zero. Then the next month you would again deposit 1200 and spend 1200, bringing one account to -1000, one to -1100, and the rest to +200. You average to zero actually on deposit because some of the ""accounts"" have negative balances and some have positive. But aren't doing that. You ""caught up"" the months you were  behind. So it would be like putting in $1200 for the first account, $1100 for the second, $1000 for the third and so on - a total of $7800. Then you take out $1200 and go down to 6600. The next month you put in $1200 and take out $1200 but you will always have that $6600 amount in there. All of the accounts will have positive balances - averaging $550 in this example."