Credit Expenses when someone contribute to my expenses. Is it right to do that?

Question

I rent out my flat. The renter pays rent plus certain amount of money to cover some part of common charges. I receive the sum of rent and provisions for common charges in my bank. I split the amount into:

• Debit Bank
• Credit Rental_Income (the rent amount)
• Credit Liabilities (the provision for charges)

When I pay the common charges I have to:

• Debit Liabilities
• Credit Bank

Then I manually have to count the difference between the full amount of common charges and the common charges paid by the renter then I have to pay the difference. Is there a simpler way doing this? Putting all provisions into an "envelope" so that I don't have to count the differences? Maybe I could Credit Expenses with the provisions? Or does GnuCash have some other tools to do it?

Answer 1

It really depends on what you want to achieve, what you want to track. I think I would start like this. It may still need some fine‑tuning to address your needs.

1. Setup If you have not already, create a customer for the tenant Business → Customer → New Customer… If you want to be able to learn as to how much you contributed to the common charges, create separate accounts for the lease

   • income:rental:duckburg:rent and income:rental:duckburg:common_charges
   • expenses:common_charges:duckburg

   so you can match the accounts in a Report and read the balance.

2. Rent debt For every rental period, e. g. calendar month, create an invoice for the rent excluding common charges: Business → Customer → New Invoice

3. Rent payment Let’s say the rent is ¤ 2, and the common charges are ¤ 1. For every rental period the tenant makes payments, process payments: Business → Customer → Process payments… and select Customer and Post To as appropriate.

   Click on an Invoice entry and under Amount enter the paid total amount of ¤ 3. The payment of ¤ 3 is automatically split into a Payment and into Pre‑Payment of 1 ¤, because only ¤ 2 were owed according to the invoice.

4. Common charges debt Now you receive bills e. g. by your utilities company, sanitation company, the municipal authorities etc. When creating bills via Business → Vendor → New Bill… ensure

   • you enter the tenant under Default Chargeback Project in the creation dialog, and
   • you tick the Billable? box at the right‑hand of the Invoice Entries table. A single mouse click in the Billable? column of an entry shows or hides an X. You can double‑click on column headers to adjust their width to a minimum.

5. Final account Create an invoice for the tenant. The invoice entries are automatically filled with all billable items of posted bills where the tenant was specified as the Default Chargeback Project customer.

   You can adjust the owed amounts to the fraction the tenant contributes to your expenses. At any rate, ensure you tick the Invoiced? column so the items are charged now and post the invoice.

6. Settlement Now, without receiving new payments, go to the Customer Process payment… dialog again. Press and hold the keyboard’s ⇧ Shift key while clicking on all Pre‑Payment items and the common charges invoice you just created. The Amount figures are updated as you do this. You do not need to manually calculate anything. If you include Payments (a Display option) in Reports → Business → Printable Invoice, the tenant can see when they have made Pre‑Payments and see the outstanding amount if any.

7. Common charges payment Finally, you pay the common charges bills. You need to transfer the full amount since the tenant does not transfer any money to the companies.

I recommend playing through some scenarios with this pattern in a scratch ledger (a copy of your ledger you will delete) before actually doing it. Create all the reports you might want to create.