Confusion with setup

I am new to YNAB, coming over from Quicken for Mac.  I need to manage both personal finances and small business fiance (self publishing books) and splitting into two budgets is not an option because I mix credit cards and accounts for personal and business expenses. I am looking for best practices to set up YNAB

Ok, so given the above... Some newbie questions:

1. I have money coming in from 2 sources: Paycheck (which should go to personal expenses) and 2. Book Royalties (which should go to offsetting business costs). How do I set that up? Do i just manually move royalties to a bucket called "Book Royalties inflow"? 

 

2. Royalties are paid 3 months after I earn them. Do I need to set up "Money I'm expecting to get" bucket, or should I just deal with money that's already in the account? Same with salary - should I input when I know my paycheck is coming in the future, or just wait until it's here. (I have a very solid cushion, I'm just looking for best practices)

 

3. What is the best way of handling recurring expense? rent, subscriptions, etc?  Do i just budget a big glob of money for the year?  Make a budget the first of every month? Somehow tell YNAB to grab X amount of money from Y bucket on the first of every month? (ie. Grab 3K from personal income for rent, and $1 K from Royalty income for ads on the first of every month)

 

Any other helpful "i wish i knew all this when i was setting stuff up" ideas would be welcome.  Thank you! -Alex

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  • Have you read any of the getting started materials?

    YNAB Rule 1 is Give Every Dollar a job. That means when you start, you budget the money you have. When you get new money, you budget it. You don't enter money you have not received yet.

    YNAB is not a forecasting budget, it's not a Business Annual Operating Plan. It's an allocation budget system modeled after envelope budgeting.

    And finally, I highly suggest separating business and personal accounts and budgets. It'll make things os much easier for budgeting, reporting, and taxes.

    Like 3
  • Yes, I read the manual before posting the question. Several times. According the YNAB smallbusiness posting, accounts receivable (aka "money owed to me") is a category often used in business. Which contradicts the basic personal budget rule. I am looking for clarity of whether Accounts Receivable may or may not be right for me.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
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      Tomato Rhythm Is your business running on an Accrual basis or a Cash basis for reporting and taxes? Most likely it's cash basis, so you would have no need for an Accounts receivable category in a budget program. For a cash basis business, AR and AP are just reminders that people owe you money or you are owed money, but they have no real meaning when it comes to managing cashflow.

      YNAB isn't a replacement for a true business finance application, regardless of what any of the documentation says. it just doesn't have the functionality. I run YNAB for the budgeting, and Quickbooks for the finance reporting for my business.

      Like 1
    • nolesrule  Damn, I was really hoping you wouldn't say this :))) I wanted to migrate away from Quicken for Mac for something more modern and user friendly, but you may be right that this just isn't it! Not if I want to only keep one set of records.

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  • I would echo nolesrule to separate business from personal! As a bookkeeper, this is the number one piece of advice that I share with my clients. It's easy to get a separate bank account for business income. And it helps sooo much at tax time 'cause different rules apply to business income vs. employment income. 

    Next, you can use YNAB for your business: especially if you have separate bank accounts. Then you can create two budgets and keep them separate. Much easier to see exactly what's what.

    Having said that, I do daily money management for a client who has a rental property. While we do have a separate bank account, I'm tracking it all in one budget. I have categories set up to allocate the rental funds into taxes, property insurance, maintenance, etc. When the rental check hits, I allocate it out same day. I do not setup recurring transactions for it. I like to include the target category balance in the category name to help me know that I have enough allocated out for the expense. 

    I do this on the personal side as well: for recurring expenses, if it's a fixed amount I have that in the category name and then make sure I have the funds to cover it. I then budget in future months for those expenses as I have the spare funds in order to build a deep buffer. 

    While YNAB is not a Quickbooks or Xero replacement (I use it in conjunction with either of those apps), if your business income/expenses are few, you can use it instead of them. But if you need/want deeper reporting (ie: balance sheet/income statement/etc.) then you'll need a bookkeeping app. 

    Hope that helps! Please let me know if I can clarify anything! :-) 

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  • Is the self-publishing a substantial source of income for you, or is it a hobby business? That might affect how you treat it in YNAB. A lot of people keep hobby businesses as a category group--they inflow income from the hobby into an "income" category (the only time you'd ever want to use such a category), and then distribute it among the various expenses. 

    However, I agree that if the income is substantial or if you are taking tax deductions for your business, you should absolutely keep everything separate. 

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    • MsTJ
    • YNAB has given me back my future
    • Believer_in_YNAb
    • 2 yrs ago
    • Reported - view

    You bring up a good question about whether you need to run two budgets or one.  I have rental property and keep a separate checking and credit card for my business expenses.  I keep them both in my regular, every day budget, in separate category groups. Rental expenses have their own category group and as I spend on them, this is where I keep track of the expenses.  At year end, I separate all expenses related to the rentals out and do my taxes with ease.  During the year, some expenses are intermingled, like rent, insurance and utilities.  These are included in my "fixed monthly expenses" category group which includes both personal and business expenses.  When tax time comes I rearrange things according to personal or business, according to tax rules.  Not sure this is the "recommended" way to do things and it works for me. 

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