Many self-employed individuals primarily provide services to their customers or clients. They maintain no inventory, have no employees, pay for purchases as they are made, and operate as sole traders or proprietors (that is, they have no partners or other shareholders). Yet they need to keep accurate records of time spent and materials purchased for completion of jobs, may need to collect and remit taxes assessed on their services, and want to submit professional quotes and invoices to their customers. Examples of such individuals include:
This Guide outlines basic steps for setting up business as a self-employed services provider. Rather than furnishing detailed instructions at every phase, it links to other Manager Guides. Suggestions are offered for accommodating additional needs and for further simplification.
If the setup described closely meets your needs, you can download a version of it following instructions in another Guide.
Create your business on the Businesses page, which functions as the home page of the Manager application. Click Add Business and select Create New Business:
For purposes of illustration, this Guide will follow creation of a business named Sample Consulting. The first step is to enter the name of the business:
Once the business has been created, a Summary page will appear showing four, default functional tabs and several default accounts:
Now enable additional functional tabs you will need for your business. Click Customize below the left navigation pane and enable these additional tabs:
If all your work will come without needing to give customers quotes, proposals, or bids, do not enable Sales Quotes. If you will, for some reason, be buying from suppliers on credit, add Purchase Invoices to the list. If you are not sure, leave both those tabs off the list. They can easily be added later. Likewise, if you are not sure whether you will own depreciable fixed assets, do not enable that tab unless you need it later.
Every business needs at least one bank or cash account, even if that means your own pocket. So add one or more now so the business can spend and receive money. The illustration below is for a bank account, but a petty cash account is set up the same way:
If you will have a business credit card, set it up now. (This example does not include one.)
Several accounts in Manager are activated automatically only when needed. So you can see these, make the following setup entries:
Item nameas Setup Fixed Asset. Leave all other fields blank.
If your business will own no property qualifying as fixed assets or your services are not taxable in your jurisdiction, omit one or both of the last two setup entries above.
Now click on Settings, then Chart of Accounts, where all active accounts will be listed:
Click Edit next to Retained earnings. Change the name of this account to Owner’s equity. This built-in account will function in the same way, but the default title was more appropriate to corporate ownership structures.
Click Edit buttons next to income accounts to rename or delete them. Automatically created accounts cannot be deleted while their tabs are enabled. But they can be renamed. Their default names show in grey when editing. Add any additional income accounts you think you will need.
Because Sample Consulting expects to perform some work on an hourly basis and some on a fixed price basis, we will rename Billable time - invoiced to Service sales - billable time and Sales to Service sales - fixed rate. Since no interest-bearing accounts or investments are anticipated, we will change the Interest received account to Other income, providing a place to post miscellaneous income items.
Donations are not allowable business expenses in Sample Consulting’s jurisdiction, so we will delete the Donations account. Computer equipment is not treated differently from other tools and equipment, so we will rename Computer equipment as Equipment. The owner of Sample Consulting plans to work from home, so we will change Rent to Other expenses.
With all changes mentioned, Sample Consulting’s chart of accounts is complete. It’s Summary page now looks like this:
Although they have no financial impact on your records, you should clear the setup entries. (These were only made so you could see and edit all accounts.)
Some accounts will temporarily disappear from your Summary and chart of accounts. They will return when real entries are made.
As long as your setup tax code was one you will actually use, leave it in place.
Manager is now configured to handle your business. Among other things, you will be able to:
The next step is to enter any expected customers. Others will hopefully follow. Enter other transactions as they occur.