Clarity Accounting Enter Income View

Online Accounting Software | Enter Income

This is the enter income view users will see as soon as they sign in and enter the “Dashboard” area.

It is split into 4 sections using horizontal tabs:

• Enter Income
• Enter Invoice
• Enter Payment
• Detailed

Users of our online accounting software can also use the Income link on the left navigation to go to an income specific data entry page showing all entries as data is being entered.

Using the “Enter Income” Tab

This section is mainly used for the purpose of entering income that has already been paid.  Examples of this type of income are:

• commission income from sales
• products and services paid by cash, credit card, or direct bank transfers

Components of an Income Record

• Date
• Customer
• Invoice / record #
• Payment Account
• Income Account
• Description
• Quantity
• Price
• Applicable Sales Tax

Terms & Payment Accounts

There are 2 ways income records can be recorded.  They can be recorded as “Paid” or “Unpaid”.

Paid income records generally refer to products and services that are paid immediately with cash, credit card, or direct deposit.

Unpaid income records are generally used for invoicing.  In an accrual / double ledger accounting system, when you invoice a client for your products or services, you are considered to have “earned” that income regardless of whether or not you are paid.  Invoices usually have a “payment term” associated with it, allowing customers to pay days after the initial invoice was sent.  Outstanding invoices are referred to as “Aged Receivables” in accounting terms.  Unpaid income records will also require small businesses to track down payments and entering payments into the accounting software when payments are received.  If for some unfortunate reason, an invoice was not paid, then it can be written off as “bad debt”.

To record income that is “Paid”, select the account into which the money was (or will be) deposited. For example, if you receive a cheque and deposit it into your checking account, you would select “Checking Account”.

Income Accounts

Income accounts are used to differentiate revenue from different sources of income that will show up in your profit and loss statement.  This is also a great indicator of which products or services are most profitable to your business.  When you first create a business with Clarity Accounting, you will be asked to fill in your income sources.  However, if you did not list all the income sources at the time you set up your business profile, you can always click on the “New Income Account” to add more income accounts.

For each component of the income, select an income account in order to categorize the income; this allows you to view the income you have earned broken down by account in the Profit & Loss report.

Entering Income Case Study:

Jane is a real estate agent who received $10,000 in commission income from Remax (the real estate agency she represents) on October 3, 2008 for the sale of a piece of property.  She is paid via direct deposit into her checking account.  There are no applicable taxes in this transaction.

Click “Add” after the data has been entered.

Multi-Currency Entries

If your company pays and accepts income in currencies other than your own default currency, please use the “Enter Invoice” tab for multi-currency options.

Available options after clicking “Add”

Edit

The edit option will bring you to a summary of this particular record, allowing you to change anything you need to change.

Repeat

This option allows you to “repeat” this transaction.  Many people use this feature if they are entering an income record with very similar elements such as same customer with the same payment and income accounts.  This allows users to make minor changes with date, description, or price without re-entering all the information.

Download PDF

A PDF of the transaction can be downloaded as an invoice or a receipt (with the balance due marked $0.00) depending on the nature of the transaction.  We allow users to add their own logo on the PDF download.  Please refer to the help file “Uploading logo to Invoices” for detailed instructions.

The purpose of this help file is to show Clarity Accounting users how to enter invoices as well as creating and downloading PDF Invoices.

Invoices can be entered right on the Dashboard or under the “Income” section on the vertical navigation bar.

Clarity Accounting Invoice View

This section is used for small businesses whose primary method of getting paid is through “Invoicing”.  Invoices are generally issued by businesses providing products or services to their clients.  An invoice usually consists of the following elements:

• Invoice Number
• Invoice Date
• Vendor Contact Information
• Client Contact Information
• Payment Terms / Due Date
• Income Account
  
• Quantity (number of items sold / number of hours worked)
• Price / Rate (cost per item / hourly rate)
• Subtotal
• Applicable Taxes
• Balance Due
• Pre-payments (if applicable)

Terms & Payment Accounts

There are 2 ways income records can be recorded.  They can be recorded as “Paid” or “Unpaid”.

Paid income records generally refer to products and services that are paid immediately with cash, credit card, or direct deposit.

Unpaid income records are generally used for invoicing.  In an accrual / double ledger accounting system, when you invoice a client for your products or services, you are considered to have “earned” that income regardless of whether or not you are paid.  Invoices usually have a “payment term” associated with it, allowing customers to pay days after the initial invoice was sent.  Outstanding invoices are referred to as “Aged Receivables” in accounting terms.  Unpaid income records will also require businesses to track down payments and entering payments into the accounting software when payments are received.  If for some unfortunate reason, an invoice was not paid, then it can be an expense written off as “bad debt” .

To enter a “Paid” invoice, select one of the rows with “Paid” in the second column, and the bank, cash, or credit card account into which the payment is deposited.  For example, if you received a cheque and deposited it into the bank, you would select your Checking Account.

To enter an “Unpaid” invoice, select one of the rows with “Unpaid” in the second column, and the number of days the receiver has after the invoice date to pay.  For example, if you receive a bill that has “net 30″ terms (due 30 days after receipt), you would select “30 days”.

Income Accounts

Income accounts are used to differentiate revenue from different sources of income that will show up in your profit and loss statement.  This is also a great indicator of which products or services are most profitable to your business.  When you first create a business with Clarity Accounting, you will be asked to fill in your income sources.  However, if you did not list all the income sources at the time you set up your business profile, you can always click on the “New Income Account” link to add more income accounts.

For each line item on the invoice/income record, select the income account that best matches that item, or add a new one if it doesn’t fit an existing category.

Sample Case Study:

Clarity Accounting recently demonstrated their online accounting software at a very successful Launch Party event put together by Bootup Labs.  They received overwhelming requests from bloggers and freelancers to integrate Clarity Accounting with Freshbooks.  This is because Freshbooks is an awesome online invoicing software and Clarity Accounting is an awesome online accounting software.  Freelancers thought such an integration would allow those who use Freshbooks to generate Balance Sheet and Profit and Loss reports within Clarity Accounting.

Creators of Clarity Accounting took user suggestions seriously and contracted Habitsoft, Inc. to implement the Clarity Accounting - Freshbooks integration.  It took Habitsoft, Inc. 40 hours of work to complete the project and Habitsoft charges an hourly rate of $100 / hour.  Habitsoft sends an invoice to Clarity Accounting with a 30 day term (payment of the invoice is due within 30 days of the date the invoice was created).  There was also a 5% sales tax applicable to this invoice.

This is how the data entry fields look like:

After Habitsoft clicks “Add”, it will be given several options:

Download PDF

Click this link to download a PDF of the invoice.  Users can add their own logo on the PDF invoice.  Please refer to the help file “Uploading logo to Invoices” for instructions on uploading your own logo.

Here is what the PDF invoice for this example looks like:

Please note: Addresses and contact information shown on the invoice will depend on how much information is included when filling out the Business Profile information as well as the Customer information when adding a new customer.  You can edit the customer information by going to the “Customer” link on the Dashboard under “Setup”.

Edit

The edit option will bring you to a summary of this particular record, allowing you to change anything you need to change.

Repeat

This option allows you to “repeat” this transaction.  Many people use this feature if they are entering an income record with very similar elements such as same customer with the same payment and income accounts.  This allows users to make minor changes with date, description, or price without re-entering all the information.

Entering Payments

When Habitsoft receives a payment from Clarity Accounting, it will have to enter the payment into the accounting system with an associated Bank and Income Account.  For detailed information on how to add invoice payments, please refer to the help file “Adding Invoice Payments”.

The purpose of this help file is to explain the concepts of income,  invoices, and payments within the context of small businesses accounting using an online accounting software.

Clarity Accounting Enter Income View

Online Accounting Software | Enter Income

This is the enter income view users will see as soon as they sign in and enter the “Dashboard” area.

It is split into 4 sections using horizontal tabs:

Enter Income
Enter Invoice
Enter Payment
Detailed

Enter Income

This section is mainly for users who collect income on commission or receiving regular income cheques without having to invoice clients to be paid.  A classic example would be a real estate agent who just need to enter an commission income cheque / deposit.  Use this section to enter an income if you have already been paid.

Payment Account

If an income does not have a payment term (due date) attached to it, it is assumed that this income has been paid.  In which case, you can select an appropriate bank account where the payment has been deposited.  For instructions on how to set up accounts, please view our help file for Accounts Set Up.

Enter Invoice

This section is used for small businesses whose primary method of getting paid is through “Invoicing”.  Invoices are generally issued by businesses providing products or services to their clients.  An invoice usually consists of the following information:

• Invoice Number
• Invoice Date
• Vendor Contact Information
• Client Contact Information
• Payment Terms / Due Date
• Quantity (number of items sold / number of hours worked)
• Price / Rate (cost per item / hourly rate)
• Subtotal
• Applicable Taxes
• Balance Due
• Pre-payments (if applicable)

For general instructions on how to create PDF invoices, please refer to the help file “Create PDF Invoices”.

Accounts Receivable (AR)

One of the intricacies of small businesses accounting for tax purposes is that an income is incurred as soon as an invoice is sent regardless of whether or not a payment has been made.  If a business has an outstanding invoice of $1500 to Test Company that has never been paid during the fiscal year, then the government assumes the $1500 invoice you sent to Test Company as “taxable income”.  Don’t worry, if this seems unfair, you can actually deduct $1500 off as bad debt (expense) when it comes time to report your income to the government.

It is important to note that when a business sends out an invoice, it does not mean that the invoice has been paid.  Businesses genearlly uses the following payment terms (listing from most common to least common):

• Net 30 (due 30 days after the invoice has been issued)
• Due upon receipt (due as soon as the client receives the invoice - hoping they will pay quickly)
• Net 60 (due 60 days after the invoice has been issued)
• Net 90 (due 90 days after the invoice has been issued)

Accounts Receivable is a term generally used in accounting and it basically means outstanding invoices yet to be paid.  Whenever an invoice is created that is not marked as “paid”, you will see the outstanding balance in the Accounts Receivable section on your Clarity Accounting Dashboard.

Clarity Accounting Enter Invoice View

Online Accounting Software | Enter Invoice

Enter Payment

Every invoice created with a payment term gives rise to the need to collect the payment and recording this payment into the accounting system.  For example, if an invoice of $1500 was issued to Test Company on September 4th with a Due Upon Receipt payment term, then we would hope that Test Company will pay as soon as they receive the invoice so a payment can be recorded.

Clarity Accounting Enter Payment View

Online Accounting Software | Enter Payment

For detaled instructions on how to enter invoice payments, please refer to the help file “Invoice Payments”.

Detailed View

The “Detailed” tab in the income section is simply a combination of data entry fields from the “Enter Invoice” tab and the “Enter Payment” type.  We found that many accountants and bookkeepers prefer using this view when doing their data entry but it is basically there for people who would like to the option to include a lot of detail when entering data.

Clarity Accounting Detailed View

Online Accounting Software | Invoice Detailed View