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Detox Your Small‑Business Finances — the Beancount Way

· 10 min read
Mike Thrift
Mike Thrift
Marketing Manager

Turn one messy ledger into a calm, cash‑confident business in 30 days—using plain‑text accounting.


2025-09-04-detox-your-small-business-finances

TL;DR

  • Separate, simplify, and lock your books with a lean chart of accounts, consistent imports, and automated balance checks.
  • Surface what matters—COGS, overhead, cash runway—via quick bean-query reports.
  • Cut the noise (unused subscriptions, duplicate tools) and codify good habits (weekly reconcile, monthly close, receipts attached).
  • Make tax season boring by keeping statements, receipts, and balances verifiable in one place.

Why a “Detox”?

Financial clutter in a small business isn't just messy—it's expensive. It hides wasteful spending, obscures your true profitability, and turns tax season into a frantic scavenger hunt. A financial detox is a focused, 30-day reset: you identify what moves (and leaks) money, remove the complexity, and then institutionalize simple, repeatable routines to keep it clean.

Beancount is the perfect tool for this because it’s transparent, scriptable, and verifiable. Unlike black-box software, a plain-text ledger means every number is explainable. Every check and balance can be automated with directives and queries, creating a self-auditing system that forces clarity. This guide will walk you through a four-week plan to achieve just that.


Week 0 — Set Your Baseline

Before you can clean up, you need a solid foundation. This week is about defining the structure of your financial world.

Create a Lean Chart of Accounts

Your chart of accounts is the skeleton of your financial system. The goal here is minimalism. Don't create an account for every possible expense you might have. Start with the essentials you use today; you can always add more later. A cluttered chart of accounts encourages miscategorization and makes high-level analysis difficult.

Here’s a simple, effective starting point:

; Core entities
2025-01-01 open Assets:Bank:Checking USD
2025-01-01 open Assets:Bank:Savings USD
2025-01-01 open Liabilities:CreditCard:Business USD
2025-01-01 open Income:Sales
2025-01-01 open Expenses:COGS
2025-01-01 open Expenses:Overhead:Rent
2025-01-01 open Expenses:Overhead:Utilities
2025-01-01 open Expenses:SaaS
2025-01-01 open Equity:Opening-Balances

Lock Balances You Can Verify

The most powerful feature in plain-text accounting is the ability to assert reality. A balance directive tells Beancount: "On this date, this account had exactly this much money." If it doesn't, Beancount will raise an error. This is your primary safety net.

When starting out, use pad in combination with balance to initialize your accounts from a bank statement. The pad directive creates a transaction that forces the account to the correct starting balance, booking the difference to an equity account.

; Initialize from statements
2025-01-01 pad Assets:Bank:Checking Equity:Opening-Balances
2025-01-01 balance Assets:Bank:Checking 12345.67 USD

A word of caution: Use pad sparingly. It's for getting started cleanly, not for papering over recurring reconciliation mistakes.


Week 1 — Separate and Simplify Flows

With a structure in place, it's time to clarify how money moves through your business.

Keep Business ≠ Personal

This is the golden rule of small-business finance. Co-mingling funds is a recipe for confusion and tax-time headaches.

  • Maintain one dedicated business bank account and one business credit card.
  • Mirror this separation in your ledger: Assets:Bank:Business:Checking, Liabilities:CreditCard:Business.
  • If you pay yourself, book it as a distribution to Equity:Owner-Draws. Never categorize personal expenses directly from business accounts.

Standardize Vendor Categories

Do you pay for AWS, Google Cloud, and Vercel? Don't create three separate accounts. Map them all to a single, logical category like Expenses:Cloud. Avoid creating micro-accounts you won't actually analyze. The goal is to see patterns, not to track every single vendor with its own account.


Week 2 — Automate Inputs and Receipts

Manual data entry is slow, error-prone, and unsustainable. This week is about building a machine to feed your ledger reliably.

Build a No-Drama Import Path

Beancount's import framework lets you teach it how to read CSV or OFX files from your bank and automatically generate transactions. Invest the time to set this up once, and you'll save hundreds of hours down the line. Keep your importer rules in version control (like Git) so your system is repeatable and backed up.

  • Start with Beancount’s official Importing External Data guide.
  • For a more interactive workflow, consider a tool like beancount-import, which provides a web UI for semi-automatic matching.
  • Many users rely on the built-in ingest or newer beangulp frameworks to build their custom importers. Pick one and stick with it for consistency.

Attach Documents Where They Belong

A transaction without a receipt is an unsubstantiated claim. Beancount and its web interface, Fava, make it trivial to link source documents to entries, creating an unshakeable audit trail.

You have two great options:

  1. Documents Folder + Directive: Store all your receipts and statements in a dedicated folder. Then, link a file to a transaction using the document directive.
  2. Drag-and-Drop in Fava: Simply drag a PDF or image file onto a transaction in the Fava UI. Fava automatically stores the file and inserts the correct document directive into your ledger file for you.
; In your main ledger file, tell Fava where your documents live
option "documents" "/home/acme/docs"

; Link a receipt to a specific transaction posting
2025-08-07 * "Figma" "Monthly Subscription"
Assets:CreditCard:Business -12.00 USD
Expenses:SaaS 12.00 USD
document: "receipts/figma-2025-08-07.pdf"

Week 3 — See the Truth (Fast Queries You’ll Reuse)

Your ledger is now clean and fed with data. It's time to ask it important questions. Fire up the bean-query command-line tool to get instant answers.

1) Where’s My Cash?

Get a quick snapshot of your liquid assets.

bean-query business.beancount 'BALANCES FROM year = 2025 AND (account ~ "Assets:Bank" OR account ~ "Liabilities:CreditCard")'

This gives you an immediate, real-time view of your cash position without logging into multiple bank portals.

2) What Am I Spending On Overhead vs. COGS?

Understand where your money is really going. Are you spending more on non-essential overhead or on the costs directly tied to delivering your product (Cost of Goods Sold)?

SELECT
account,
units(sum(position))
WHERE
account ~ "^Expenses:(Overhead|COGS)" AND year = 2025
GROUP BY
account
ORDER BY
account

This query separates your core operational costs from your administrative burden, a critical insight for profitability.

3) Which Subscriptions Look “Zombie”?

Find recurring, small-dollar expenses that often fly under the radar. These "zombie" subscriptions can bleed your cash flow dry.

SELECT
payee,
COUNT(*) AS num_transactions,
SUM(number) AS total_spent
WHERE
account ~ "^Expenses:SaaS" AND date >= '2025-01-01'
GROUP BY
payee
ORDER BY
num_transactions DESC,
total_spent DESC

This query instantly reveals vendors you pay frequently. If you see one you don't recognize or no longer need, it's time to cancel.


Week 4 — Tidy and Lock the System

The final week is about building the habits and guardrails that keep your finances clean for good.

Put Simple Budgets in Place

Fava can read budget directives from your ledger and display helpful progress bars in its reports, showing you if you're on track. This provides a gentle, constant reminder of your spending goals.

; Cap SaaS spending at $100 per month
2025-01-01 custom "budget" Expenses:SaaS "monthly" 100.00 USD

Set these for key variable expense categories like software, advertising, or contractors to notice drift before it becomes a problem.

Close the Month, Every Time

Establish a simple, non-negotiable monthly closing process:

  1. Reconcile: For every bank and credit card account, add a balance assertion matching the final number on your monthly statement.
  2. Attach: Attach the PDF statement itself to the balance entry using the document directive.
  3. Report: Run your three saved queries (cash, overhead/COGS, subscriptions) and paste the outputs into a short monthly review note.

The balance assertion is an automatic tripwire. If your ledger doesn't match the bank statement, Beancount will throw an error, telling you exactly where to look for the discrepancy.


Make Tax Season Boring (In a Good Way)

By following this system, you transform tax preparation from a crisis into a simple reporting exercise.

  • Receipts are attached to transactions, so there’s no frantic search. In Fava, you’re one click away from the source document for any expense.
  • Tax-relevant items can be tagged (e.g., #tax-deductible), allowing you to pull a clean report with bean-query for your accountant.
  • Year-end balances are locked and verified with balance assertions, giving you and your preparer confidence in the numbers.

A 30-Day Checklist (Print This)

  • Day 1–3
    • Create a minimal chart of accounts.
    • Add pad + balance for each bank/card using the latest statements.
  • Day 4–10
    • Set up one importer pipeline and commit your rules to version control.
    • Backfill 90 days of transactions; run a first BALANCES snapshot.
  • Day 11–15
    • Standardize vendors to their respective accounts (SaaS, Cloud, Shipping, etc.).
    • Attach statement PDFs for the reconciled periods; confirm they appear in Fava.
  • Day 16–20
    • Run the overhead vs. COGS query; fix any miscategorized items.
    • Run the subscription frequency query; cancel or consolidate unused services.
  • Day 21–25
    • Add one or two budget caps for key variable expenses via custom "budget".
    • Save your three most important bean-query commands to a script for easy reuse.
  • Day 26–30
    • Reconcile all accounts with month-end balance assertions.
    • Write a short "monthly close" note summarizing key numbers and linking to documents.

Common Snippets You’ll Reuse

A Clean Expense Posting

2025-08-05 * "Figma" "Pro plan"
Expenses:SaaS 12.00 USD
Assets:Bank:Checking -12.00 USD

Balance Assertion from a Statement

2025-09-01 balance Assets:Bank:Checking  8423.17 USD

Budget Guardrail for Rent

2025-01-01 custom "budget" Expenses:Overhead:Rent "monthly" 2500.00 USD

Keep It Simple, Keep It Scripted

The philosophy of a Beancount-powered financial detox is simple:

  • Script what you repeat: Automate imports and reporting.
  • Let assertions fail loudly: They are your safety rails, not an inconvenience.
  • Prefer fewer, clearer accounts over perfect, granular categorization.

Adopt these habits, and your business will run on tight feedback loops: cash visibility daily, spending drift visible weekly, and a truly boring year-end. That's the clarity and control this detox is designed to deliver.


References & Further Reading

This post is for educational purposes only and is not tax or legal advice.

Understanding Journal Entries in Beancount

· 8 min read
Mike Thrift
Mike Thrift
Marketing Manager

Journal entries are the backbone of double-entry accounting, and in Beancount, every * transaction you write is a journal entry. This guide explains the essentials—debits and credits, adjusting entries, and reversing entries—and shows how they map cleanly to Beancount's plain-text syntax. You'll learn how to keep precise books with minimal ceremony.


2025-09-02-journal-entries-in-beancount

A Quick Refresher: What Is a Journal Entry?

A journal entry is the formal, dated record of a financial transaction. It's expressed in terms of debits and credits that keep the fundamental accounting equation in balance:

Assets=Liabilities+EquityAssets = Liabilities + Equity

In a double-entry system, every transaction affects at least two accounts, and the total debits must equal the total credits. This simple rule is what makes downstream financial reports like the Profit & Loss statement and Balance Sheet trustworthy and accurate.


Debits and Credits in One Minute

The concepts of debits and credits can be confusing at first, but they boil down to a few simple rules. Think of it this way: "where did the value come from?" (credit) and "where did the value go?" (debit).

Here's a cheat sheet for how they increase the five core account types:

Account TypeIncreases With
AssetsDebit
ExpensesDebit
LiabilitiesCredit
EquityCredit
IncomeCredit

How a Journal Entry Looks in Beancount

Beancount uses simple, human-readable text directives to record transactions. Each transaction must balance to zero for every commodity (e.g., USD, EUR, AAPL stock). Beancount will throw an error if it doesn't.

Here is a basic transaction for buying coffee:

2025-09-10 * "Coffee Bar" "Team coffee"
Expenses:Food:Coffee 18.00 USD
Assets:Bank:Checking -18.00 USD

Notice how the two postings (lines with accounts) sum to zero: $18.00 + (-$18.00) = 0.

You can add powerful context directly in the narration using tags (like #clientX) for filtering and links (like ^INV-2025-001) to connect related entries.

For example, here's how you can link an invoice to its payment:

; First, record the invoice you sent to the client
2025-09-15 * "Acme Corp" "Invoice 2025-001 #clientX ^INV-2025-001"
Assets:AccountsReceivable 1000.00 USD
Income:Consulting -1000.00 USD

; Later, record the payment and link it back to the original invoice
2025-09-28 * "Acme Corp" "Payment on ^INV-2025-001"
Assets:Bank:Checking 1000.00 USD
Assets:AccountsReceivable -1000.00 USD

The #clientX tag lets you easily filter all transactions for this client, and the ^INV-2025-001 link creates a connection between the two entries that you can follow in reports.


Common Journal Entries (Ready to Paste)

Here are several common business transactions formatted for Beancount.

Owner Invests Cash

An owner contributes personal funds to start the business.

2025-01-01 * "Owner" "Initial capital contribution"
Assets:Bank:Checking 10000.00 USD
Equity:Owner-Capital -10000.00 USD

Cash Sale with Sales Tax

A customer pays in cash for a product, including an 8% sales tax you must later remit to the government.

2025-01-05 * "Walk-in Customer" "Cash sale with 8% tax"
Assets:Cash 108.00 USD
Income:Sales -100.00 USD
Liabilities:Tax:Sales -8.00 USD

Sale on Credit (Invoice) and Collection

You provide a service and invoice the client, then receive payment later.

2025-01-10 * "Acme Corp" "Consulting invoice ^INV-2025-002"
Assets:AccountsReceivable 2500.00 USD
Income:Consulting -2500.00 USD

2025-01-30 * "Acme Corp" "Payment on ^INV-2025-002"
Assets:Bank:Checking 2500.00 USD
Assets:AccountsReceivable -2500.00 USD

Expense on Credit Card

You purchase office supplies using a company credit card.

2025-01-12 * "OfficeMax" "Supplies on credit card"
Expenses:Office:Supplies 75.00 USD
Liabilities:CreditCard -75.00 USD

Payroll (Simple Model)

You run payroll, recording the gross wage expense, employee tax withholdings, and the net payment from your bank.

2025-01-31 * "Payroll" "January wages and withholdings"
Expenses:Payroll:Wages 2000.00 USD
Liabilities:Taxes:Withheld -400.00 USD
Assets:Bank:Checking -1600.00 USD

Monthly Depreciation

You record the monthly depreciation expense for an asset, like a laptop.

2025-01-31 * "Depreciation" "Laptop, straight-line"
Expenses:Depreciation 100.00 USD
Assets:Equipment:AccumDepr -100.00 USD

Prepaid Expense & Monthly Amortization

You pay for a full year of insurance upfront, then recognize one month's worth of the expense.

; 1. Pay for the annual policy
2025-01-01 * "InsureCo" "Annual insurance premium"
Assets:Prepaid:Insurance 1200.00 USD
Assets:Bank:Checking -1200.00 USD

; 2. Recognize one month of expense at the end of January
2025-01-31 * "InsureCo" "Amortize 1/12 of insurance"
Expenses:Insurance 100.00 USD
Assets:Prepaid:Insurance -100.00 USD

Unearned Revenue & Monthly Recognition

A customer prepays for a 3-month subscription. You record the cash and then recognize one month of income.

; 1. Customer prepays for service
2025-02-01 * "Subscriber" "3-month plan prepaid"
Assets:Bank:Checking 300.00 USD
Liabilities:Unearned:Subs -300.00 USD

; 2. Recognize one month of income after delivering the service
2025-02-28 * "Recognition" "Recognize month 1 of 3"
Liabilities:Unearned:Subs 100.00 USD
Income:Subscriptions -100.00 USD

Bad-Debt Allowance and Write-Off

You set aside an allowance for potentially uncollectible invoices and later write off a specific bad invoice.

; 1. Create a provision based on 2% of Accounts Receivable
2025-03-31 * "Provision" "2% of A/R for doubtful accounts"
Expenses:BadDebt 200.00 USD
Assets:AllowanceForDoubtful -200.00 USD

; 2. Write off a specific invoice that you know will not be paid
2025-04-15 * "Write-off" "Customer XYZ invoice"
Assets:AllowanceForDoubtful 150.00 USD
Assets:AccountsReceivable -150.00 USD

Periodic Inventory & COGS Adjustment

At the end of a period, you calculate the Cost of Goods Sold (COGS) by adjusting your inventory account.

2025-03-31 * "COGS adjustment" "Periodic inventory method"
Expenses:COGS 4500.00 USD
Assets:Inventory -4500.00 USD

Adjusting Entries vs. Reversing Entries

Adjusting entries are recorded at the end of an accounting period (like a month or quarter) to properly align revenues and expenses to the period in which they were actually earned or incurred. This includes accruals, deferrals, and estimates like depreciation.

Reversing entries are optional entries made on the first day of a new period that exactly reverse a specific adjusting entry from the prior period. Their purpose is to simplify bookkeeping. By reversing an accrual, you can book the subsequent cash transaction in a standard way without having to remember to split it against the liability account.

Example: Accruing and Reversing Utilities

Let's say you need to record your January utility expense, but the bill won't arrive until February.

; 1. Accrue the estimated expense at the end of January
2025-01-31 * "Accrual" "Estimate January utilities expense"
Expenses:Utilities 500.00 USD
Liabilities:Accrued:Utilities -500.00 USD

; 2. (Optional) Reverse the accrual on the first day of the next period
2025-02-01 * "Reversal" "Undo January utilities accrual"
Liabilities:Accrued:Utilities 500.00 USD
Expenses:Utilities -500.00 USD

; 3. Record the actual bill payment when it arrives in February
; The actual bill is for $520. Because of the reversal, you can
; book the full amount to the expense account without issue.
; The net expense for Feb will be $520 - $500 = $20.
2025-02-10 * "City Utilities" "Payment for January bill"
Expenses:Utilities 520.00 USD
Assets:Bank:Checking -520.00 USD

Note: The example in the outline shows splitting the final payment. The reversing entry method is an alternative that simplifies the final payment entry.


A Checklist for Every Beancount Journal Entry

Follow these steps to ensure your entries are clean and correct:

  1. Start with the date (YYYY-MM-DD) and a transaction flag (*).
  2. Add a payee and a descriptive narration. Use #tags and ^links for searchability.
  3. Include at least two posting lines that balance to zero for each commodity.
  4. Use proper account names under the five types: Assets, Liabilities, Equity, Income, Expenses.
  5. Optionally, add metadata like document: "invoices/INV-2025-001.pdf" for traceability.

Common Pitfalls (and How Beancount Helps)

  • Imbalanced Postings: If your debits and credits don't sum to zero, Beancount will refuse the entry. This is a core feature that prevents errors. You can even leave one posting amount blank, and Beancount will automatically calculate it for you.
  • Wrong Sign on an Account: It's easy to forget that Income, Equity, and Liabilities are increased with credits (which are typically negative numbers in Beancount). If you get it wrong, your reports will look strange, but the balancing rule still provides a safety net.
  • Missing Links Between Entries: Forgetting to link an invoice to its payment makes it harder to track what's outstanding. Using ^links consistently solves this by creating an auditable trail.

Where to Go Next

  • Beancount Language & Balancing Rules: Dive deeper into the official documentation.
  • Syntax Cheat Sheet: A handy reference for all Beancount directives.
  • Debits/Credits Primer: A great starting point if you're new to accounting rules.
  • Adjusting/Reversing Entries: More detailed articles on the accounting theory.

Appendix: Accounting Talk → Beancount Map

This quick translation guide can help you map accounting instructions to Beancount syntax.

Accounting InstructionBeancount Action
Debit an expensePositive amount to an Expenses: account
Credit a liabilityNegative amount to a Liabilities: account
Accrue revenueAssets:AccountsReceivable + <br> Income:* -
Defer revenueAssets:Bank:* + <br> Liabilities:Unearned:* -
Recognize deferred revenueLiabilities:Unearned:* + <br> Income:* -

With these patterns and examples, you can cleanly model nearly any business event in Beancount, ensuring your financial reports line up without any surprises.

10 Practical Steps to a Fast, Reliable Month-End Close in Beancount

· 7 min read
Mike Thrift
Mike Thrift
Marketing Manager

If your ledger lives in plain text, your month-end close can be both fast and auditable. The process doesn't need to be a frantic scramble of spreadsheets and calculators. This guide distills a clean, repeatable process tailored for Beancount and its web interface, Fava, built around balance assertions, smart imports, and lightweight checks.

Here's the checklist for a painless close:

2025-09-02-month-end-close

  1. Gather statements and import all raw transactions.
  2. Normalize payees, descriptions, and metadata.
  3. Reconcile every cash, bank, and credit account with balance assertions.
  4. Tie out transfers and inter-account moves.
  5. Update prices for investments and verify valuations.
  6. Attach or source documents (receipts, invoices) in your ledger.
  7. Run queries and dashboards for P&L and variance checks.
  8. Post accruals and adjustments as needed.
  9. Validate the ledger with automated checks.
  10. Commit, tag, and archive the month.

1. Set the Ground Rules (and Reuse Them)

A consistent close starts with a stable foundation. Your Chart of Accounts and key Beancount options should be declared centrally and rarely changed. Options like operating_currency and documents handling ensure your reports and imports behave predictably every single time.

Tip: Treat your options file as "infrastructure." Changing it can alter how your numbers are computed. Version it carefully in Git.


2. Import Everything—Then Never Hand-Type It Again

Automating your data import is the single biggest speed-up for closing your books. Use Beancount’s powerful importing tools and community-built importers to pull in bank feeds, credit card CSV/OFX files, brokerage data, and payroll reports.

The goal is a one-command import that generates balanced postings that you only need to review and commit. This eliminates manual data entry, the primary source of errors and delays.


3. Normalize Payees and Metadata Up Front

Clean data is reliable data. Standardize your payees, narration, and tags during the import process so that your searches, rules, and reports remain accurate month after month.

Beancount’s plugin system lets you add lightweight transformations and validations as your files are loaded. This is perfect for enforcing custom consistency checks or using the built-in noduplicates plugin to flag repeat transactions before they become a problem.


4. Reconcile with balance Assertions

For every account that has a statement (checking, savings, credit cards), use Beancount’s balance directive to assert the closing balance. This simple line turns reconciliation from a manual eyeball-check into a precise, automated test.

; Asserts the balance is exactly 1234.56 at the start of the day
2025-09-01 balance Assets:Bank:Checking 1234.56 USD

Because balances are checked at the beginning of the day, it's easiest to use the first day of the next month for a month-end statement. If Beancount’s calculated balance disagrees with your assertion, you’ll get a precise error and a date to begin your investigation. Always fix the source of truth (your transactions) first; don't "force" a reconcile.


5. Tie Out Inter-Account Transfers

Ensure every transfer appears on both sides of the transaction. A payment from your checking account to your credit card, for instance, should be reflected in both accounts. Mismatched transfers are a common source of reconciliation headaches.

Use the pad directive only for setting historical opening balances when you first set up an account. It’s a setup tool, not a reconciliation crutch to fix month-end differences.


6. Verify Positions and Prices for Investments

To get an accurate view of your net worth, you need up-to-date market values for your investments and foreign currencies. Use Beancount’s price directive to record these values as of your closing date.

2025-08-31 price VTI  290.14 USD
2025-08-31 price EUR 1.11 USD

Many tools can fetch these prices for you automatically. After updating them, re-run your balance sheet or net worth reports to see the valuation changes.


7. Attach Receipts and Source Documents

Maintain a clean audit trail by linking transactions to their source documents. Use the documents option in your main Beancount file to point to your archive of receipts and invoices.

option "documents" "/path/to/Finance/Documents"

If you name your files by date (e.g., 2025-08-13.vendor.receipt.pdf), Beancount and Fava can automatically discover and link them, making it easy to pull up a receipt for any transaction with a single click.


8. Review the Month with Fava and BQL

A fast feedback loop is critical. Use Fava to visually inspect your finances. Its charts and reports are perfect for slicing expenses by category, checking income trends, and spotting anomalies at a glance.

For more precise checks, use the Beancount Query Language (BQL). This query, for example, gives you a ranked breakdown of all expenses for August 2025:

SELECT
account,
ROUND(SUM(position), 2) AS total
WHERE
date >= 2025-08-01 AND date < 2025-09-01
AND account ~ 'Expenses'
GROUP BY
account
ORDER BY
total DESC;

9. Post Accruals and Adjustments

If you use accrual accounting, record your month-end adjustments as explicit, dated transactions. This can include accrued expenses (like a utility bill you haven't received yet), prepaid expense amortization, or revenue recognition. Keep them simple and well-documented in the narration so they are easy to understand during future reviews.


10. Validate, Tag, and Archive

Before you finalize the month, run a final check for structural integrity:

bean-check your-ledger.beancount

This command will catch imbalances, references to accounts you haven't opened, and other common errors. Fix anything it flags.

Once everything is correct, commit your changes to version control (like Git) with a clear message and tag, such as close-2025-08. Finally, archive your bank statements and consider the month locked.


A Simple Close Script You Can Adapt

You can automate most of these steps with a simple shell script. This turns your close into a single, repeatable command.

#!/usr/bin/env bash
set -euo pipefail

# Example: ./close.sh 2025-08
MONTH=${1:?Please provide a month in YYYY-MM format}
LEDGER=~/finance/ledger.beancount

# 1. Import new transactions
echo "Importing transactions for $MONTH..."
make import MONTH="$MONTH"

# 2. Update market prices for the last day of the month
PRICE_DATE=$(date -d "$MONTH-01 +1 month -1 day" +%F)
echo "Fetching prices for $PRICE_DATE..."
make prices DATE="$PRICE_DATE"

# 3. Validate the entire ledger
echo "Running bean-check..."
bean-check "$LEDGER"

# 4. Generate a key report (e.g., expense breakdown)
echo "Generating expense report for $MONTH..."
bean-query "$LEDGER" -f txt "
SELECT account, SUM(position)
WHERE date >= '${MONTH}-01' AND date < '${MONTH}-01' + 1 month
AND account ~ 'Expenses'
GROUP BY account ORDER BY SUM(position) DESC;
" > "reports/${MONTH}-expenses.txt"

# 5. Commit and tag the close in Git
echo "Committing and tagging the close..."
git -C ~/finance add .
git -C ~/finance commit -m "Close ${MONTH}"
git -C ~/finance tag "close-${MONTH}"

echo "Month ${MONTH} is closed and tagged."

Why This Works

This process is fast and reliable because it’s built on a few core principles:

  • Assertions, not Eyeballs: The balance directive turns reconciliation into a precise, automated check.
  • Deterministic Inputs: Automated importers and normalized metadata make your ledger reproducible and consistent.
  • Explorable Data: Fava and BQL provide powerful tools to validate results and drill into outliers instantly.
  • Auditable Changes: Adjustments are plain-text journal entries, making them easy to review and understand months or years later.

A good month-end is mostly logistics. With Beancount, you can turn it into a short, scriptable ritual: import, assert, price, query, and commit. Keep the workflow stable, and your close will stay fast—even as your financial life grows more complex.

The Best Business Lines of Credit (2025)

· 9 min read
Mike Thrift
Mike Thrift
Marketing Manager

If you want flexible working capital you can draw, repay, and reuse, a business line of credit (LOC) beats taking repeated term loans. Below are this year’s strongest options by use‑case, plus a quick way to compare costs and a simple Beancount recipe for recording draws, interest, and fees.


2025-08-27-best-business-lines-of-credit-2025

TL;DR — Best‑fit picks by scenario

  • Fast, flexible fintech line: Bluevine — up to $250k, weekly or monthly repayment, funding often within 24 hours, rates advertised “as low as 7.8% (simple interest).”
  • Fee‑based draws with multiple terms: American Express Business Blueprint® Line of Credit — line sizes 2k2k–250k; choose 1–3‑month single‑repayment loans or 6–24‑month installment loans with fixed loan fees (not APR).
  • Prime‑based bank line with clear pricing: Wells Fargo BusinessLine® / Prime Line — BusinessLine: Prime + 1.75% to +9.75%; Prime Line: Prime + 0.50% (floor 5%); typical credit limits 10k10k–150k.
  • Relationship pricing & a way to “graduate”: Bank of America — unsecured Business Advantage line (relationship discounts 0.25–0.75%); or Cash‑Secured line where your deposit sets the limit (from $1,000), helpful to build business credit.
  • Branch + national reach: Chase Business Line of Credit — online up to $250k, 5‑year revolving period then 5‑year repayment (available in 48 states).
  • **Up to 250kwithclearannualfeepolicy:U.S.BankCashFlowManagerlinesto250k with clear annual fee policy:** **U.S. Bank Cash Flow Manager** — lines to 250k; unsecured option to 100k;noannualfeeifline100k; no annual fee if line \> 50k (otherwise $150).
  • Newer businesses that need speed (know the cost): Headway Capital5k5k–100k, calculator shows starting ~3.3% monthly + 2% draw fee.
  • Fast approvals but typically expensive: OnDeck LOC — up to $200k; company‑reported average APR ~56.6% for lines (H1’25).
  • For bigger, lower‑rate, monitored lines (if you qualify): SBA lines — classic CAPLines umbrella programs and the newer 7(a) Working Capital Pilot (WCP). WCP lets lenders issue monitored revolving lines up to $5M with an SBA guaranty.

What changed or matters in 2025? 📈

Two key trends are shaping the business credit landscape this year:

  1. Prime settled lower than 2023 highs. The Wall Street Journal Prime Rate is 7.50% (as of September 2, 2025), last changed on December 19, 2024. This is the benchmark rate that directly feeds the pricing for most variable-rate bank lines of credit (which are typically priced as "Prime + a margin"). A stable, lower Prime Rate means more predictable costs for borrowers.
  2. SBA rolled out/expanded monitored working‑capital lines. The 7(a) Working Capital Pilot (WCP) program, effective August 1, 2024, continues to expand. It enables lenders to issue asset- or transaction-based monitored LOCs, which is a huge help for businesses needing financing for inventory, receivables, or specific contracts.

ProviderMax line sizeHow pricing worksNotable terms/feesBest for
Bluevine$250,000Simple‑interest rates “as low as 7.8%”; weekly or monthly repaymentsFunding often within 24 hoursFast, flexible online LOC with straightforward draws
AmEx Business Blueprint®2,0002,000–250,000Loan fee instead of interest; choose 1–3 mo. single‑repayment or 6–24 mo. installmentSee posted fee ranges by term; instant deposit to AmEx Business Checking optionPredictable fees; choose short vs. longer payback per draw
Wells Fargo BusinessLine®10,00010,000–150,000Variable Prime + 1.75% to +9.75%Unsecured revolving linePrime‑based bank line with transparent margin
Wells Fargo Prime LineVariesPrime + 0.50% (min floor 5%)Generally for stronger profilesLower‑margin option if you qualify
Chase Business LOCOnline to $250,000Variable (not publicly posted online)5‑yr revolving, then 5‑yr repayment; not in AK/HIEstablished bank LOC with long revolving window
U.S. Bank Cash Flow ManagerUp to $250,000Variable; secured & unsecured optionsUnsecured up to 100k;noannualfee100k; no annual fee \> 50k (else $150)Clear fee policy; broad branch network
PNC Unsecured LOC20,00020,000–100,000WSJ Prime + margin (variable)$175 annual feeSmaller lines; relationship banking
Headway Capital5,0005,000–100,000Starting ~3.3% monthly + 2% draw fee (state‑based)Weekly or monthlyYounger firms that need speed (mind the cost)
OnDeck LOCUp to $200,000High average APR ~56.6% (H1’25)Fast approvals; weekly payments commonShort‑term cash gaps; expensive capital
SBA CAPLines & 7(a) WCPUp to $5,000,000SBA‑capped rates via lenders; monitored linesWCP facilities up to 12 months, renewable; CAPLines maturities up to 10 yearsLarger, structured working‑capital needs with collateral

How to choose the right LOC (7 quick checks) ✅

  1. Index & Margin: If it’s a bank line priced as "Prime ± X%", check today’s Prime Rate (7.50%) and add the margin you’re offered. That’s your current variable Annual Percentage Rate (APR).
  2. Fee‑based vs. Interest‑based: Some fintechs (like AmEx Blueprint) charge a fixed "loan fee" per draw instead of interest. Compare the effective APR of that fee to interest-based offers before deciding.
  3. Annual/Draw Fees: These add to your total cost, especially if you use the line infrequently. U.S. Bank waives its 150annualfeeforlinesover150 annual fee for lines over 50k, while PNC lists a $175 fee for its unsecured LOC.
  4. Repayment Cadence: Weekly payments (common with online lenders) can smooth out cash flow but require more frequent management. Monthly payments simplify bookkeeping. Bluevine offers both weekly and monthly options.
  5. Funding Speed: If you need cash now, speed is critical. Bluevine often funds within 24 hours, and American Express offers instant deposits on draws to an AmEx Business Checking account.
  6. Eligibility & Graduation Path: If you can't qualify for an unsecured line yet, a product like Bank of America’s cash‑secured line (starting at $1,000) can help you build business credit and "graduate" to an unsecured line later.
  7. Consider SBA for Size or Structure: For larger needs tied to inventory, receivables, or contracts, the SBA's 7(a) WCP or CAPLines programs can provide larger, monitored lines at regulated rates, provided you can handle the more in-depth underwriting.

A quick cost comparison tip 🧮

Comparing offers can be tricky. Here's a simple way to think about it:

  • Prime‑based example: If a bank offers you Prime + 2.75%, your starting APR today is 10.25% (7.50% + 2.75%). Remember, this rate will float up or down if the Prime Rate changes.
  • Fee‑based example (AmEx Blueprint): A 12-month draw with a 6–18% total loan fee might seem low. However, to compare apples-to-apples, you must compute the equivalent APR on the amortizing balance. A fixed fee on the initial draw amount is not the same as an APR on a declining balance.

Beancount: How to record a line of credit

For users of the plain-text accounting tool Beancount, tracking a line of credit is straightforward. The LOC is a liability; draws increase that liability and your cash, while interest and fees are expenses. Replace the account names below to match your own ledger.

1) Draw $25,000 from your LOC to your checking account

2025-03-15 * "LOC draw"
Assets:Bank:Checking 25,000.00 USD
Liabilities:LOC:Bluevine -25,000.00 USD

2) Make a 2,300payment(2,300 payment (300 interest, $2,000 principal)

2025-04-15 * "LOC payment (principal + interest)"
Liabilities:LOC:Bluevine 2,000.00 USD
Expenses:Interest:LOC 300.00 USD
Assets:Bank:Checking -2,300.00 USD

3) Record a $150 annual fee charged to your bank account

2025-01-10 * "Annual LOC fee"
Expenses:BankFees:LOC 150.00 USD
Assets:Bank:Checking -150.00 USD

Alternative: If the annual fee is added to the line's balance instead of being debited from your bank account, the transaction would be:

2025-01-10 * "Annual LOC fee added to balance"
Expenses:BankFees:LOC 150.00 USD
Liabilities:LOC:Bluevine -150.00 USD

When an SBA-backed line makes more sense

An SBA-guaranteed line isn't for everyone, but it's a powerful tool if:

  • You need a bigger credit limit than what most fintech or bank unsecured products offer.
  • Your working capital needs are tied to collateral like accounts receivable (A/R), inventory, or signed contracts.
  • You can handle the monitoring requirements, such as submitting borrowing base certificates and regular financial reporting.

If this sounds like your business, look into the SBA CAPLines programs and the 7(a) Working Capital Pilot (WCP). These programs can facilitate lines up to $5M, and standard CAPLines can have maturities of up to 10 years.


Application checklist 📝

Be prepared. Most lenders will ask for the following:

  • Time in business, revenue, and credit score: Banks typically want 1–2+ years in business and stronger credit, while many online lenders have more flexible criteria but price for the added risk.
  • Financials: Have your recent bank statements, business tax returns, and potentially A/R aging or inventory reports ready.
  • Personal Guaranty: This is a standard requirement for most business lines of credit. It means you are personally responsible for repaying the debt if the business cannot.

Key sources


Final word

A line of credit is about control: draw what you need, when you need it. In 2025, Prime-based bank lines remain attractive for those who qualify, while fintech lines trade higher costs for incredible speed and flexibility. For larger, more complex needs, SBA-backed lines unlock structured facilities. The key is to run the numbers (always convert fees to an effective APR), understand the fee structure, and pick a repayment schedule that keeps your business financially healthy—and your Beancount ledger clean.

Recording Taxes in Beancount (The Pragmatic Way)

· 8 min read
Mike Thrift
Mike Thrift
Marketing Manager

Taxes can feel like a special, complicated beast in the world of personal finance. But what if they weren't? What if you could treat them just like any other flow of money in your ledger? Good news: you can. By treating taxes as simple movements of value, your Beancount ledger will stay clean, easy to query, and—most importantly—understandable.

Below is a practical, no-nonsense pattern you can drop into a personal or small-business Beancount file. It’s a simple system for handling paychecks, tax payments, and even those pesky refunds that cross over into the new year. We'll cover the essential accounts you need, walk through real-world examples, and show you the exact queries to run to get the answers you need.

2025-08-25-recording-taxes-in-beancount


The Core Principles

Before we dive into the code, let's agree on a few simple rules. These principles keep things logical and prevent future headaches.

  • Separate "what it is" from "when the cash moves." 🗓️ This is the most important concept. A tax expense belongs to the year you earned the income (e.g., 2024), even if you settle the bill with the IRS in April 2025. If you don't separate the timing of the expense from the timing of the cash payment, your year-over-year reports will get messy and misleading.

  • Keep your account hierarchy boring and simple. 📁 Name your accounts clearly based on the type of tax (e.g., IncomeTax, SocialSecurity). This makes your queries incredibly simple. Don't clutter account names with vendor names or form numbers like "W-2" or "1099"; use metadata and tags for those details instead.

  • Embrace accrual for year-end adjustments. ⚖️ Even for a personal ledger, using a simple accrual entry at year-end is the cleanest way to make your reports accurate. It means recognizing an expense or refund in the correct year, even if the money doesn't move until the next. It’s one small extra step that saves you from mental gymnastics later.

  • Write for your future self. 🧠 Your goal is clarity. Only add extra details, like the tax year, to an account name if it genuinely makes your queries easier. Avoid creating a new set of accounts every single year (Expenses:Taxes:2024:Federal, Expenses:Taxes:2025:Federal, etc.) unless you have a compelling reason. A flat structure is often easier to manage.


A Minimal Account Skeleton

Here’s a basic set of accounts to get you started. This structure is US-centric, but you can easily adapt the names for your own country's tax system. Just drop these open directives into your Beancount file.

; --- US Federal Income & Payroll Taxes ---
; For money withheld from your paycheck
2024-01-01 open Expenses:Taxes:Federal:IncomeTax:Withheld USD
; For estimated payments or tax-day bills you pay directly
2024-01-01 open Expenses:Taxes:Federal:IncomeTax:Payments USD
; For tax refunds you receive
2024-01-01 open Expenses:Taxes:Federal:IncomeTax:Refunds USD

; Your FICA contributions
2024-01-01 open Expenses:Taxes:Federal:SocialSecurity USD
2024-01-01 open Expenses:Taxes:Federal:Medicare USD

; --- Other Common Taxes ---
; For sales/use taxes you pay on purchases
2024-01-01 open Expenses:Taxes:Sales USD

; --- Accounts for Year-End Adjustments (Optional but Recommended!) ---
; A temporary holding account for taxes you owe but haven't paid yet
2024-01-01 open Liabilities:AccruedTaxes:Federal:Income USD
; A temporary holding account for a refund you're owed but haven't received
2024-01-01 open Assets:Tax:Receivable USD

This setup separates withheld taxes from direct payments and refunds, making it easy to see exactly where your money went. The Liabilities and Assets accounts are our secret weapon for keeping year-end reporting accurate.


Example 1: The Paycheck

Let's book a typical paycheck where taxes are withheld automatically. The key is to record your gross pay first, then show how it was split between taxes and the cash that actually landed in your bank account.

2025-07-15 * "Employer Inc." "Salary for first half of July"
Income:Work:Salary -6,000.00 USD
Expenses:Taxes:Federal:IncomeTax:Withheld 1,200.00 USD
Expenses:Taxes:Federal:SocialSecurity 372.00 USD
Expenses:Taxes:Federal:Medicare 87.00 USD
Assets:Cash:Checking 4,341.00 USD

This single transaction tells the whole story:

  • You earned $6,000 in gross income.
  • $1,200 of it was sent to the IRS for federal income tax.
  • 372wenttoSocialSecurityand372 went to Social Security and 87 to Medicare.
  • The remaining $4,341 is what you took home.

Pro-tip: You can attach metadata from your pay stub (like pay_period_end: "2025-07-15") to the transaction for an easy audit trail.


Example 2: Filing Your Return (The Year-Crossing Problem)

Here's the scenario that trips people up: It's April 2025, and you're filing your 2024 taxes. You learn that after all your withholding, you still owe an extra $3,000.

How do you record this? You want the expense to count toward 2024, but the cash payment happens in 2025. Here are two excellent ways to handle it.

Option A: The Manual Two-Step Accrual

This method is pure Beancount, no plugins required. It's a clear, two-step process.

Step 1: Recognize the expense at the end of the tax year. On the last day of 2024, you create a "true-up" entry. No cash is moving yet; you're just acknowledging the expense and parking it in a temporary liability account.

2024-12-31 * "Federal income tax true-up for 2024"
Expenses:Taxes:Federal:IncomeTax:Payments 3,000.00 USD
Liabilities:AccruedTaxes:Federal:Income -3,000.00 USD

Now, your 2024 income statement correctly shows this $3,000 expense.

Step 2: Record the cash payment when it happens. In April 2025, when you actually send the money to the IRS, you clear out the liability.

2025-04-15 * "IRS" "Payment for 2024 tax return"
Liabilities:AccruedTaxes:Federal:Income 3,000.00 USD
Assets:Cash:Checking -3,000.00 USD

Your 2024 reports are correct, and your 2025 cash flow is correct. Perfect! This same pattern works in reverse for a refund—just use Assets:Tax:Receivable instead of the liability account.

Option B: Automate It with a Plugin

If you prefer to keep the payment in a single transaction, a fantastic community plugin called beancount_reds_plugins.effective_date can help. It lets you assign a different "effective date" to a single line item.

First, enable the plugin in your main Beancount file: plugin "beancount_reds_plugins.effective_date"

Now, you can write a single transaction. The plugin will automatically split it behind the scenes to make your reports accurate.

; One entry; the plugin handles the rest
2025-04-15 * "IRS" "Payment for 2024 tax return"
Assets:Cash:Checking -3,000.00 USD
Expenses:Taxes:Federal:IncomeTax:Payments 3,000.00 USD
effective_date: 2024-12-31

Here, the cash portion is recorded on April 15, 2025, but the expense portion is retroactively applied to December 31, 2024. It achieves the same result as Option A with a different workflow.


What About Sales Tax?

For most personal ledgers, sales tax is simple. If you're not claiming it back, just split it out as its own expense during a purchase.

2025-07-19 * "Local Grocery Store"
Expenses:Groceries 12.32 USD
Expenses:Taxes:Sales 1.28 USD
Assets:Cash:Checking -13.60 USD

This lets you easily track how much you're spending on sales tax over the year. If you run a business that deals with VAT, you'd use a more formal system with payable and receivable accounts, but the principle is the same.


Queries You'll Actually Run

The whole point of this structure is to make getting answers easy. Here are some BQL queries to see your tax picture.

1. What was my total federal income tax for 2024?

SELECT cost(sum(position))
WHERE account ~ "Expenses:Taxes:Federal:IncomeTax"
AND date >= 2024-01-01 AND date < 2025-01-01;

2. How did that total break down between withholding, payments, and refunds?

SELECT account, cost(sum(position))
WHERE account ~ "Expenses:Taxes:Federal:IncomeTax"
AND date >= 2024-01-01 AND date < 2025-01-01
GROUP BY account
ORDER BY account;

3. Do I have any outstanding tax debts or receivables? (Useful for checking your work!)

SELECT account, units(sum(position))
WHERE account ~ "Liabilities:AccruedTaxes" OR account ~ "Assets:Tax"
GROUP BY account
ORDER BY account;

If this query returns non-zero balances, it means you have accruals you haven't settled yet.


Quick FAQ

  • Do I really need per-year accounts like Expenses:Taxes:2024? Probably not. The accrual method (or the plugin) keeps a flat account structure clean and readable. Only create per-year accounts if you find it makes your specific queries easier to write.

  • Can Beancount calculate my taxes for me? Not directly, but it can prepare the data. Some advanced users write scripts to pipe BQL query results into tax calculation software, which is great for estimating your liability during the year.

  • Is this tax advice? No. This is a bookkeeping pattern for organizing your data. The accounting is sound, but you should always consult a tax professional for advice specific to your situation.


Your Drop-In Checklist

Ready to get started?

  1. Add the account skeleton to your Beancount file (and adapt names for your country).
  2. Book paychecks by starting with gross income and splitting out the tax postings.
  3. At year-end, accrue any true-ups for payments or refunds using a liability/asset account (or use the effective_date plugin).
  4. Track refunds as receivables and clear them when the cash arrives.
  5. Run the BQL queries above to verify your totals before you file.

Keep it boring, keep it consistent, and your tax season will finally feel like just another part of your financial story—not a mystery to be solved.

Accrued Expenses in Beancount: A Practical Guide (with copy-paste ledger examples)

· 8 min read
Mike Thrift
Mike Thrift
Marketing Manager

Accrued expenses sound abstract until month-end closes start piling up. They are a cornerstone of proper accrual accounting, ensuring your financial reports reflect economic reality, not just when cash changes hands. Here’s a clear, Beancount-first walkthrough of what they are, why they matter, and exactly how to book, reverse, and report them in your plain-text ledger.

TL;DR ⚡

  • Accrued expenses are costs you’ve incurred this period but haven’t paid yet. They are recorded as a liability until the cash goes out.
  • In Beancount, this is simple: you debit an Expenses: account and credit a Liabilities:Accrued: account. Later, you clear the liability when you pay.
  • To report, you can see what you owe as of a specific date by running a bean-query with CLOSE ON and CLEAR to get a clean balance-sheet snapshot.

2025-08-24-accrued-expenses-in-beancount-a-practical-guide

What is an Accrued Expense?

An accrued expense is a cost that a business has incurred, but has not yet paid. It's recorded when the service is received or the cost is incurred, even if the invoice hasn't arrived or the payment isn't due yet. This practice follows the matching principle of accrual accounting, which dictates that expenses should be recorded in the same period as the revenues they helped generate.

Common examples include:

  • Wages earned by employees at the end of a month but paid in the next.
  • Utilities (electricity, water) you used in December but won't be billed for until January.
  • Interest on a loan that has accumulated over the month but has not yet been withdrawn from your account.

By recording these costs when they happen, you get a much truer picture of your company's financial performance for that period.

How Beancount Thinks About It (in 30 seconds)

Beancount is a plain-text, double-entry accounting system. Everything is a dated directive or transaction in a text file. The system is built on five core account types: Assets, Liabilities, Equity, Income, and Expenses.

Entries are always ordered by date. A key detail is that balance assertions are checked before same-day transactions are processed. This is important to remember when you place checks and reversing entries.

Finally, the bean-query language provides a powerful, SQL-like way to generate reports. With operators like OPEN ON, CLOSE ON, and CLEAR, you can create precise "as-of" views for financial statements.

Your Chart of Accounts (Suggested)

A clean, hierarchical chart of accounts is your best friend. For accrued expenses, the structure is straightforward. You'll need:

  • An expense account: e.g., Expenses:Utilities, Expenses:Payroll:Wages
  • A corresponding liability account: e.g., Liabilities:Accrued:Utilities, Liabilities:Accrued:Payroll
  • Your cash account: e.g., Assets:Bank:Checking

Beancount enforces the five top-level account types. Keeping your account names organized makes querying and reporting much easier down the road.

The Core Pattern (No Plugin, No Magic)

This is the most direct way to handle accruals in Beancount. It involves two steps: accruing the expense at month-end and clearing the liability when you pay.

Step 1: Accrue the Expense at Month-End

On the last day of the period, you record the expense and create the liability.

2025-02-28 * "Accrue February electricity" #accrual
Expenses:Utilities 120.00 USD
Liabilities:Accrued:Utilities

Step 2: Clear the Accrual When You Pay

When the bill comes and you pay it, you don't hit the expense account again. Instead, you debit the liability account to clear it out.

2025-03-05 * "Pay Feb electricity - City Power"
Liabilities:Accrued:Utilities 120.00 USD
Assets:Bank:Checking

This is the cleanest approach for small teams. It correctly places the expense in February and ensures you don't double-count it in March. Notice that in Beancount, leaving one amount blank lets the system balance the transaction for you automatically.

Alternative: Reversing Entry on Day 1

If you prefer the classic "auto-reverse" accounting style, you can post the opposite of your accrual entry on the first day of the next month. Then, you book the actual vendor bill to the expense account as you normally would.

Step 1: Accrue at Month-End (Same as before)

2025-02-28 * "Accrue February electricity" #accrual
Expenses:Utilities 120.00 USD
Liabilities:Accrued:Utilities

Step 2: Reverse on the First Day of the Next Month

2025-03-01 * "Reverse Feb electricity accrual" #reversal
Liabilities:Accrued:Utilities 120.00 USD
Expenses:Utilities

Step 3: Book the Payment as Usual

2025-03-05 * "City Power - February bill"
Expenses:Utilities 120.00 USD
Assets:Bank:Checking

Heads-up on checks: Remember that balance assertions evaluate before same-day transactions. If you want to check your Liabilities:Accrued:Utilities account balance, place the assertion on 2025-02-28 to confirm the accrual or on 2025-03-01 after the reversal transaction to confirm it's zero. Placing it before the reversal on 2025-03-01 will cause a false failure.

Six Common Accruals (Copy-Paste Patterns) 📋

Here are some ready-to-use examples for common business accruals.

1. Rent Not Yet Invoiced

2025-01-31 * "Accrue January rent" #accrual
Expenses:Rent 3000.00 USD
Liabilities:Accrued:Rent

2. Wages Earned but Unpaid

2025-03-31 * "Accrue March wages" #accrual
Expenses:Payroll:Wages 8500.00 USD
Liabilities:Accrued:Payroll

3. Vacation Pay (PTO) Earned

2025-03-31 * "Accrue PTO earned in March" #accrual
Expenses:Payroll:PTO 900.00 USD
Liabilities:Accrued:Payroll

4. Interest Accrued on a Loan

2025-02-29 * "Accrue monthly loan interest" #accrual
Expenses:Interest 210.00 USD
Liabilities:Accrued:Interest

5. Professional Fees (Audit/Legal)

2025-12-31 * "Accrue year-end audit fees" #accrual
Expenses:Professional:Audit 4200.00 USD
Liabilities:Accrued:Professional

6. Utilities Used but Not Billed

2025-04-30 * "Accrue April utilities" #accrual
Expenses:Utilities 95.00 USD
Liabilities:Accrued:Utilities

Reporting: "What do I owe as of a certain date?"

bean-query is your tool for getting answers. Here’s how you can get a proper balance sheet snapshot of your accrued expenses.

Get All Accrued Liability Balances at Period-End

This query gives you the balance of each accrued liability account as of March 31, 2025.

bean-query main.beancount '
SELECT account, UNITS(SUM(position)) AS balance
FROM OPEN ON 2025-01-01 CLOSE ON 2025-04-01 CLEAR
WHERE account ~ "^Liabilities:Accrued"
GROUP BY 1
ORDER BY 1;
'
  • OPEN ON sets starting balances at the period start.
  • CLOSE ON truncates transactions before this date (it's exclusive). That's why we use 2025-04-01 to get data up to and including 2025-03-31.
  • CLEAR zeroes out Income and Expenses, giving you a clean balance sheet view (Assets, Liabilities, Equity).

See a Register of All Accrual Postings

If you want to see the raw transaction history for your accrual accounts:

bean-query main.beancount '
SELECT date, payee, narration, position
WHERE account ~ "^Liabilities:Accrued"
ORDER BY date;
'

Get a Single Total for All Accruals

For a quick summary of the total amount you owe:

bean-query main.beancount '
SELECT UNITS(SUM(position)) AS total_accruals
FROM OPEN ON 2025-01-01 CLOSE ON 2025-04-01 CLEAR
WHERE account ~ "^Liabilities:Accrued";
'

Controls & "Gotchas" Specific to Beancount

  • Balance Assertions Timing: As mentioned, assertions check the balance at the start of the day. 2025-03-01 balance ... runs before any transactions on 2025-03-01. Plan accordingly.
  • Naming and Hierarchy: A tidy tree like Liabilities:Accrued:* is not just for looks. It makes your queries simpler and your reports instantly understandable.
  • Pad with Caution: The pad directive can fix opening balances, but avoid using it to "fix" recurring accruals. Making explicit entries provides a clear audit trail.
  • As-Of Reporting: For balance-sheet snapshots, always prefer OPEN ... CLOSE ... CLEAR in bean-query. This prevents income and expense accounts from polluting your liability totals.

Prepaid vs. Accrued (Quick Contrast)

It's easy to mix these up. They are mirror images:

  • Accrued Expense: Service consumed now, cash paid later. This creates a liability.
  • Prepaid Expense: Cash paid now, service consumed later. This creates an asset.

The accounting logic is the same in Beancount; only the accounts differ (Assets:Prepaid:* vs. Liabilities:Accrued:*).

Drop-in Template (Start of File)

Here are the open directives you'd need for the examples used in this post. Add these to the top of your ledger file once.

; --- Accounts (open once) ---
2025-01-01 open Assets:Bank:Checking
2025-01-01 open Expenses:Utilities
2025-01-01 open Expenses:Payroll:Wages
2025-01-01 open Expenses:Interest
2025-01-01 open Expenses:Professional:Audit
2025-01-01 open Liabilities:Accrued:Utilities
2025-01-01 open Liabilities:Accrued:Payroll
2025-01-01 open Liabilities:Accrued:Interest
2025-01-01 open Liabilities:Accrued:Professional

Final Notes

If you run your books on a cash basis, you won’t post accruals at all—expenses are simply recorded when they are paid. If you run on an accrual basis, using the patterns above is essential for matching costs to the period where you consumed the service.

The examples here provide general educational guidance. Always consult your CPA for industry-specific treatments, especially regarding bonuses, payroll taxes, and capitalization thresholds.

Accumulated Depreciation (for Beancount): A Practical, Plain‑Text Guide

· 10 min read
Mike Thrift
Mike Thrift
Marketing Manager

If you track fixed assets in your accounting—laptops, cameras, machinery, or even office furniture—your books need to reflect their declining value. This involves two key concepts: depreciation (the expense) and its running total, accumulated depreciation. This guide explains both in plain language and then shows you exactly how to model them in Beancount with copy-pasteable examples, including powerful automation options.


2025-08-23-accumulated-depreciation

What is accumulated depreciation?

Accumulated depreciation is the total amount of depreciation that has been recorded against an asset since the day it was put into service. Think of it as a running tally. It’s not a new kind of expense—it's just the to-date sum of all past depreciation charges for that asset.

In financial statements, you’ll see accumulated depreciation paired with the asset’s original price. This allows anyone reading your books to see both the historical cost (what you paid for it) and the net book value (what it's currently worth on your books).

A crucial detail is that accumulated depreciation is a contra-asset account. This might sound complex, but it's a simple idea:

  • It's an "asset" account, so it lives in the Assets section of your chart of accounts.
  • However, it carries a credit balance (a negative value in Beancount's asset accounts), which reduces the value of the related fixed asset.

Where does it appear on the balance sheet?

Accumulated depreciation typically appears on the balance sheet directly underneath the fixed asset it relates to. For example:

Equipment: Computers$3,000.00
Less: Accumulated Depreciation($1,000.00)
Equipment: Computers, Net$2,000.00

Many financial statements simplify this by showing a single line item like “Property, plant & equipment, net”. This single number represents the total historical cost of all assets minus their total accumulated depreciation, giving you the final net book value.


How do you calculate depreciation?

There are several methods for calculating depreciation. The one you choose determines how much expense you record each period, which in turn adds to the accumulated depreciation total. Two common families of methods are:

  • Straight-Line (SL): This is the simplest and most common method for bookkeeping purposes. You expense an equal amount of the asset's value in each period of its useful life. For example, a 3,000laptopwitha36month(3year)usefullifewouldbedepreciatedat3,000 laptop with a 36-month (3-year) useful life would be depreciated at 83.33 per month.
  • Tax Methods (e.g., MACRS in the U.S.): For tax purposes, governments often define specific accelerated schedules. In the U.S., the Modified Accelerated Cost Recovery System (MACRS) allows you to take larger depreciation deductions in the earlier years of an asset's life. Beancount can easily handle these schedules—you just need to calculate the amounts according to the official tables (like those in IRS Publication 946) and generate the corresponding journal entries.

Formula (Straight-Line)

Periodic Depreciation = fractextCosttextSalvageValuetextUsefulLife\\frac{\\text{Cost} - \\text{Salvage Value}}{\\text{Useful Life}}

Accumulated Depreciation (at date t) = sum(textPeriodicDepreciationuptot)\\sum (\\text{Periodic Depreciation up to } t)

Salvage value is the estimated residual value of an asset at the end of its useful life. For simplicity, it's often assumed to be zero.


The Beancount Way: Model Cost and Accumulated Depreciation

To properly track fixed assets in Beancount while preserving their original cost, you’ll use a pair of asset accounts for each category, plus an expense account.

  • Assets:Equipment:Computers:Cost (to hold the historical cost)
  • Assets:Equipment:Computers:AccumDep (the contra-asset, which will be credited over time)
  • Expenses:Depreciation:Computers (to record the periodic expense)

This structure mirrors standard accounting practice and is the recommended approach for managing fixed-asset depreciation in Beancount.


Option A: Manual Straight-Line Entries

This is the most direct method. You control every entry, which is great for understanding the mechanics.

1. Open the necessary accounts

2025-01-01 open Assets:Bank:Checking
2025-01-01 open Assets:Equipment:Computers:Cost
2025-01-01 open Assets:Equipment:Computers:AccumDep
2025-01-01 open Expenses:Depreciation:Computers

2. Record the purchase (at historical cost)

When you buy the asset, you debit the Cost account.

2025-01-20 * "Purchase MacBook Pro"
Assets:Equipment:Computers:Cost 3000.00 USD
Assets:Bank:Checking -3000.00 USD

3. Record monthly depreciation

Each month, you'll record the depreciation expense. For a 3,000assetover36months,themonthlydepreciationis3,000 asset over 36 months, the monthly depreciation is 3000 \div 36 = 83.3383.33.

The transaction involves debiting the expense account and crediting the contra-asset account.

2025-02-28 * "Monthly depreciation - MacBook Pro (SL 36mo)"
Expenses:Depreciation:Computers 83.33 USD
Assets:Equipment:Computers:AccumDep -83.33 USD ; This is the credit to the contra-asset

You would repeat this entry every month for 36 months. The balance in Assets:Equipment:Computers:AccumDep will grow more negative over time, reducing the asset's net book value.

Quick Check: You can easily check the net book value in Fava's Balance Sheet or by running a quick query:

bean-query myledger.bean "SELECT account, SUM(position) WHERE account ~ 'Assets:Equipment:Computers:(Cost|AccumDep)' GROUP BY account"

The sum of the balances of these two accounts is your net book value.


Option B: Automate with Fava’s amortize Plugin

If you use Fava (the popular web interface for Beancount) and your depreciation is a fixed amount each month, you can automate it.

First, enable the plugin at the top of your Beancount file:

plugin "fava.plugins.amortize_over"

Next, create a single transaction that defines the entire depreciation schedule.

; 1. Record the initial purchase as usual
2025-01-20 * "Purchase MacBook Pro"
Assets:Equipment:Computers:Cost 3000.00 USD
Assets:Bank:Checking -3000.00 USD

; 2. Set up the depreciation schedule
2025-01-20 * "Depreciation schedule - MacBook Pro"
amortize_months: 36
Expenses:Depreciation:Computers 3000.00 USD
Assets:Equipment:Computers:AccumDep -3000.00 USD

The plugin will see this transaction and automatically generate virtual postings for $83.33 each month for 36 months. These entries don't get written to your .bean file but appear in all reports. This is perfect for straight-line depreciation but won't work for irregular schedules like MACRS.


Option C: Generate Periodic Entries with a Third-Party Plugin

If you prefer to have real, non-virtual transactions written into your files but still want automation, a periodic entry generator is a great choice. One of the most popular is beancount-periodic by Dallas Lu. This plugin can be configured to create dated postings on your behalf, giving you the control of manual entries with the convenience of automation.


Viewing Results: Cost, Accumulated Depreciation, and Net Book Value

No matter which method you choose, your Balance Sheet will show both the Cost and AccumDep accounts under your Assets. The sum of these two is your net book value. This presentation—showing the gross cost less the accumulated depreciation—is exactly what accountants and financial analysts expect to see. It provides full transparency into the age and value of your assets.


Disposing of an Asset (Sell, Scrap, or Retire)

When an asset reaches the end of its life, you either sell it, scrap it, or retire it. To remove it from your books, you must:

  1. Remove its historical cost.
  2. Remove its associated accumulated depreciation.
  3. Record any cash received.
  4. Record any resulting gain or loss (the difference between cash received and the net book value).

Example: Selling an Asset for a Gain

Let's say you sell the MacBook Pro on June 15, 2027.

  • Original Cost: $3,000
  • Accumulated Depreciation at time of sale: -$2,500
  • Net Book Value: 3,0003,000 - 2,500 = $500
  • You sell it for: $800
  • Gain on Sale: 800(proceeds)800 (proceeds) - 500 (net book value) = $300

Here is the Beancount transaction to record the disposal:

2027-06-15 * "Sell MacBook Pro"
Assets:Bank:Checking 800.00 USD ; Cash received
Assets:Equipment:Computers:AccumDep 2500.00 USD ; Debit to zero out the contra-asset
Assets:Equipment:Computers:Cost -3000.00 USD ; Credit to remove the original cost
Income:Gains:AssetDisposals -300.00 USD ; Credit to record the gain

If the proceeds had been only 400(alossof400 (a loss of 100), you would post the difference to an Expenses:Losses:AssetDisposals account with a positive amount (a debit).


FAQ (Fast)

  • Is accumulated depreciation an asset or a liability? Neither. It’s a contra-asset. It's located in the assets section of your balance sheet but has a credit balance, which reduces the total asset value.

  • Do I ever post directly to the Cost account after purchase? Generally, no. The purpose of the contra-asset account is to preserve the original historical cost. All reductions in value due to depreciation should be posted to ...:AccumDep.

  • Can I use Beancount for MACRS (tax) schedules? Yes. You'll need to calculate the depreciation amounts for each period using the tables in IRS Publication 946. Then, you can record those amounts using manual entries or a periodic plugin. The Fava amortize plugin is not suitable for this, as MACRS amounts are not equal each month.

  • What about Section 179 expensing? Section 179 allows you to expense the full cost of qualifying property in the year you place it in service, instead of depreciating it over time. This is an election you make for tax purposes. In Beancount, this would simply be a debit to an expense account instead of a fixed asset account at the time of purchase.


Common Pitfalls (and How to Avoid Them)

  • Posting depreciation directly against the Cost account.
    • Fix: Always credit the ...:AccumDep contra-asset account. This preserves the historical cost, which is important for financial reporting.
  • Forgetting to remove Accumulated Depreciation on disposal.
    • Fix: When you sell or scrap an asset, your journal entry must include a debit to ...:AccumDep to clear its balance for that asset.
  • Mixing up bookkeeping and tax depreciation schedules.
    • Fix: Your internal management books often use straight-line for simplicity, while your tax filings may require MACRS. Keep these purposes separate and document your policy.
  • Expecting the Fava amortize plugin to handle non-equal schedules.
    • Fix: Remember that this plugin is designed only for equal monthly splits. For any other pattern, use manual postings or a more flexible periodic plugin.

Copy-Paste Template

Here is a complete template you can adapt for your own ledger.

option "title" "My Business Ledger"
plugin "fava.plugins.amortize_over" ; Remove if not using Fava automation

; --- Accounts ---
2025-01-01 open Assets:Bank:Checking
2025-01-01 open Assets:Equipment:Computers:Cost
2025-01-01 open Assets:Equipment:Computers:AccumDep
2025-01-01 open Expenses:Depreciation:Computers
2025-01-01 open Income:Gains:AssetDisposals
2025-01-01 open Expenses:Losses:AssetDisposals

; --- Purchase at historical cost ---
2025-01-20 * "Purchase MacBook Pro"
Assets:Equipment:Computers:Cost 3000.00 USD
Assets:Bank:Checking -3000.00 USD

; --- Choose ONE depreciation approach ---

; (A) Manual monthly posting
2025-02-28 * "Monthly depreciation - MacBook Pro (SL 36mo)"
Expenses:Depreciation:Computers 83.33 USD
Assets:Equipment:Computers:AccumDep -83.33 USD

; (B) Fava automation (for 36 equal monthly splits)
2025-01-20 * "Depreciation schedule - MacBook Pro"
amortize_months: 36
Expenses:Depreciation:Computers 3000.00 USD
Assets:Equipment:Computers:AccumDep -3000.00 USD

; --- Sale example (edit numbers for your actual sale) ---
2027-06-15 * "Sell MacBook Pro"
Assets:Bank:Checking 800.00 USD
Assets:Equipment:Computers:AccumDep 2500.00 USD
Assets:Equipment:Computers:Cost -3000.00 USD
Income:Gains:AssetDisposals -300.00 USD

TL;DR

  • Keep asset Cost and AccumDep in separate accounts to preserve historical cost.
  • Record depreciation with a debit to Expenses:Depreciation:... and a credit to Assets:...:AccumDep.
  • Automate equal monthly depreciation with the Fava amortize plugin or generate dated entries with a periodic plugin.
  • When disposing of an asset, you must remove both its Cost and its AccumDep from the books and record the resulting gain or loss.

Sources & Further Reading

Can I Afford to Hire an Employee?

· 10 min read
Mike Thrift
Mike Thrift
Marketing Manager

A Beancount‑first guide to modeling the real cost, testing cash flow, and wiring it into your ledger.

Hiring your first employee is a massive step. It’s a bet on your future, but it’s also a significant financial commitment that goes far beyond the number on an offer letter. Too many founders and small business owners get this wrong by fixating on salary alone, only to be surprised by the true, "fully-loaded" cost.

2025-08-22-can-i-afford-to-hire-an-employee

This guide will walk you through how to model that cost accurately, test whether you can actually afford it, and then wire that model directly into your Beancount ledger to de-risk the decision before you post the job.

The TL;DR

  • Don’t stop at salary. In the U.S., the real cost includes employer payroll taxes (Social Security, Medicare, FUTA/SUTA), benefits, insurance, tools, and recruiting. For private industry, benefits alone average ~30% of total compensation, which suggests a ~1.42× “fully loaded” multiplier on top of wages. This can vary widely by company and location.
  • A quick rule-of-thumb to start: Fully Loaded Cost ≈ Salary + Employer Payroll Taxes + Benefits + Insurance + Tools/Software + Recruiting/Ramp.
  • Use Beancount to de‑risk the decision. Model a monthly payroll budget in your ledger using Fava's budget feature. You can then run a forecast to check your runway, margins, and the payback period for the role before you commit.

1) What Actually Drives “Fully‑Loaded” Cost?

Think of an employee's salary as the tip of an iceberg. The visible part is straightforward, but the submerged costs are what can sink your cash flow if you're not prepared. Here’s the breakdown.

  • Base Pay (Wages/Salary): This is the easy part—the agreed-upon annual salary or hourly wage. It's the biggest line item, but it's just the starting point.

  • Employer Payroll Taxes (U.S.): You don't just pay your employee; you also have to pay taxes on their wages. As the employer, you are responsible for:

    • Social Security (OASDI): You pay 6.2% of an employee's wages up to an annual cap. For 2025, that wage base is $176,100.
    • Medicare (HI): You pay 1.45% of all employee wages, with no income cap.
    • Unemployment Taxes (FUTA & SUTA): Federal Unemployment Tax Act (FUTA) is 6.0% on the first $7,000 of wages. However, most employers receive a credit for paying state unemployment taxes (SUTA), bringing the effective FUTA rate down to 0.6%. SUTA rates vary significantly by state and your company's history.
  • Benefits: This is often the second-largest cost. It includes things like health insurance, retirement contributions (e.g., a 401(k) match), and paid leave. Across U.S. private industry, benefits average about 30% of total compensation. For perspective, the average annual premium for employer-sponsored health insurance in 2024 was $8,951 for single coverage and $25,572 for family coverage. While employees contribute, the employer typically covers the lion's share.

  • Workers’ Compensation Insurance: This is legally required in nearly every state and covers medical costs and lost wages if an employee is injured on the job. The rates depend on your state, industry, and the employee's role (an office worker is much cheaper to insure than a roofer). Don't budget zero for this.

  • Tools & Overhead: Your new hire needs the right equipment to do their job. This includes a laptop, software licenses (SaaS seats), a desk if you have an office, and payroll processing software itself. A typical payroll service for a small business runs around $49–$50 per month as a base fee, plus $6–$10 per employee.

  • Recruiting & Ramp-up: Don't forget the one-time costs. This includes fees for job postings, your own time spent interviewing, and most importantly, the ramp-up period. A new hire may take 1–3 months to reach full productivity, during which you're paying their full cost for partial output.


2) A Concrete Example

Let's make this tangible. Imagine you're hiring a U.S.-based employee at an $80,000 salary. You plan to offer single-coverage health insurance, covering the national average employer share of ~84% of the premium.

Here’s how the annual cost breaks down:

  • Employer Payroll Taxes:

    • Social Security (OASDI): $80,000 \times 6.2% = $4,960$
    • Medicare: $80,000 \times 1.45% = $1,160$
    • FUTA (at effective rate): $7,000 \times 0.6% = $42$
    • Total Employer Payroll Taxes: $6,162
  • Health Insurance (Your Share):

    • Using the 2024 average premium for single coverage ($8,951) and your 84% contribution: 8,951×0.84=**$7,519 per year** (or $˜627/month)8,951 \times 0.84 = \text{**\$7,519 per year** (or \~\$627/month)}.
  • Payroll Software & Tools:

    • Payroll Software: ($50 base + $6/employee) × 12 months = ~$672 per year.
    • Tools/Laptop/SaaS (estimated): $2,000 per year.

Let's add it all up:

ItemAnnual Cost
Salary$80,000
Employer Payroll Taxes$6,162
Health Insurance$7,519
Payroll Software$672
Tools & Laptop$2,000
Total Annual Cost$96,353
Monthly Cost~$8,029

In this scenario, the fully-loaded cost is $96,353, which is 1.20× the base salary. This is a relatively lean benefits package. If you offered a 401(k) match, more generous paid leave, or family health coverage, you could easily approach the national average multiplier of ~1.42×. For an $80k salary, that would imply a total cost closer to $113,800.

The Takeaway: Your true cost will likely be between 1.20× (lean) and 1.40×+ (richer) of the base salary. Run your own numbers to find out.


3) “Can I Afford It?”—Three Pragmatic Tests

Now that you have a realistic monthly cost (~$8,029 in our example), how do you know if you can sustain it?

  1. Gross-Margin Coverage: Does the role pay for itself? If your business has a 65% gross margin, your new hire needs to generate at least $12,352 in new monthly revenue ($8,029 ÷ 0.65) just to break even. If the role is designed to save costs, it needs to find equivalent, durable expense reductions.

  2. Payback & Runway: How long until the hire generates a positive return, and can you survive until then? Aim for a 6–12 month payback period on the role's business case—the shorter, the safer. Crucially, you should have at least 3–6 months of the fully-loaded cost in cash as a buffer after accounting for the ramp-up period.

  3. Ramp Reality: A new hire won't be 100% effective on day one. Budget for 1–3 months of onboarding and lower productivity. If your cash cushion can't cover both their salary and the initial productivity dip, you're not ready. Consider starting with a contractor or part-time employee to validate the need first.

A U.S.-Specific Note: If this is your first hire or your first hire in a new state, double-check your compliance requirements. FUTA credit reductions can apply in certain states, and SUTA rates vary wildly. Workers' compensation laws also differ. Getting this wrong can lead to penalties.


4) Make the Model Real in Beancount

The best way to know if you can afford a hire is to see the impact directly in your books. Here’s how to do it with Beancount.

A. Set a Payroll Budget with Fava

Before anything else, add the projected monthly costs to your ledger using Fava's custom "budget" directive. This lets you visualize the new expense against your income.

; Budgeting for one employee at ~$96k/year fully-loaded cost
2025-09-01 custom "budget" Expenses:Payroll:Wages "monthly" 6666.67 USD
2025-09-01 custom "budget" Expenses:Payroll:Taxes:Employer "monthly" 513.50 USD
2025-09-01 custom "budget" Expenses:Benefits:HealthInsurance "monthly" 626.57 USD
2025-09-01 custom "budget" Expenses:Tools:PayrollSoftware "monthly" 55.00 USD

Once added, Fava’s Income Statement and Changes reports will automatically show you how you're tracking against this new, higher expense level.

B. Record an Actual Payroll Run

When you run payroll, you have two common ways to record it.

  • Detailed (with Liabilities): This is the most accurate method. It separates your employer taxes from employee withholdings, treating the latter as liabilities that you hold temporarily before remitting them to the government.
2025-09-30 * "Payroll - Alice (September)" ; Example withholdings for illustration
Expenses:Payroll:Wages 6666.67 USD
; Employer-side taxes (your direct cost)
Expenses:Payroll:Taxes:Employer:SocialSecurity 413.33 USD
Expenses:Payroll:Taxes:Employer:Medicare 96.67 USD
Expenses:Payroll:Taxes:Employer:FUTA 3.50 USD
; Employee withholdings (held as liabilities)
Liabilities:Payroll:Withholding:Federal -1000.00 USD
Liabilities:Payroll:Withholding:State -300.00 USD
Liabilities:Payroll:FICA:Employee:SocialSecurity -413.33 USD
Liabilities:Payroll:FICA:Employee:Medicare -96.67 USD
; Cash out to bank (net pay to employee)
Assets:Bank:Checking -4853.54 USD

Later, when your payroll provider withdraws the taxes, you'll record a separate transaction to clear the liabilities (e.g., Liabilities:Payroll:Withholding:Federal -> Assets:Bank:Checking).

  • Simplified (Lump-Sum): If your payroll provider debits your account in one combined transaction and you don't need to track the detailed liabilities, this is a simpler approach.
2025-09-30 * "Gusto payroll run - Alice"
Expenses:Payroll:Wages 6666.67 USD
Expenses:Payroll:Taxes:Employer 513.50 USD
Expenses:Payroll:Fees:Provider 55.00 USD
Assets:Bank:Checking -7235.17 USD

C. Forecast Your Runway

Structure your chart of accounts with a top-level Expenses:Payroll account. Use tags like employee: "Alice" on transactions to filter reports by person. With your budget in place, you can use Fava to overlay your plan versus actuals each month. If you find yourself consistently over budget, it’s time to rerun your affordability tests.


5) When Hiring Does and Doesn't Make Sense (Quick Checklist)

It likely makes sense if... ✅

  • You are turning away profitable work or delaying product launches due to a lack of capacity.
  • You can clearly define a revenue target or cost-savings goal that the new hire will be responsible for.
  • Your cash runway comfortably covers the 1–3 month ramp-up period plus an additional 3–6 months of the fully-loaded cost.

You should probably wait if... 🛑

  • Demand for your work is spiky and unpredictable. Start with a contractor or part-time help to manage the variable workload first.
  • You can achieve the same goals by buying a better tool or automating a process for a fraction of the cost.
  • You can't tie the role to a measurable business outcome. "I'm feeling busy" is not a business case.

Reference Numbers (U.S., 2025)

  • Social Security Wage Base: $176,100
  • Employer Tax Rates: 6.2% for Social Security (on wages up to the base), 1.45% for Medicare (no cap).
  • FUTA Tax Rate: 6.0% on the first $7,000 of wages, but typically 0.6% effective after state tax credits.
  • Benefits as Share of Compensation: Averages ~29.7% in U.S. private industry, implying a ~1.42× average multiplier on wages.
  • Avg. Health Premiums (2024): $8,951 for single coverage / $25,572 for family.
  • Workers’ Comp: Required in nearly every state; rules and rates vary.
  • Payroll Software Cost: Ballpark $49–$50 base fee + $6–$10 per employee, per month.

A Note on Compliance

This guide is for modeling financial costs. Actually hiring an employee involves legal and administrative compliance. You'll need to set up federal and state payroll tax accounts, verify employment eligibility (Form I-9), have employees fill out tax forms (W-4), and comply with state-specific new-hire reporting and local tax laws. Always consult official resources from the IRS, SSA, and your state's department of labor.


Final Thought

Hiring is an investment, and the best investors do their homework. Before you write the job description or post on LinkedIn, put the hire into your Beancount ledger. Model it as a budget and forecast the impact on your cash. If the numbers hold up in your own books, you’re ready to hire with confidence.


Recent Reporting & Context

Amazon Seller Fees (2025): What They Are—and How to Book Them in Beancount

· 9 min read
Mike Thrift
Mike Thrift
Marketing Manager

Selling on Amazon is a powerful way to reach millions of customers, but the platform's fee structure can feel like a maze. If you're an operator who values clean, auditable, double-entry books, tracking these costs accurately is non-negotiable. This guide breaks down Amazon's 2025 US marketplace fees and shows you exactly how to record them using the plain-text accounting tool, Beancount.

TL;DR ⚡

2025-08-21-amazon-seller-fees-2025

  • You’ll encounter a handful of recurring Amazon charges: Selling plan, Referral, Closing (media), FBA fulfillment & storage, Inbound placement, Low‑inventory‑level, Returns processing, Refund administration, and a High‑volume listing fee for very large catalogs.
  • Keep a separate Assets:Amazon:Clearing account. Book sales and fees there; when Amazon pays out, transfer the net to your bank. This makes reconciliation a breeze.
  • Track each SKU as its own commodity (e.g., SKU:WATER-BOTTLE) so Beancount can compute your Cost of Goods Sold (COGS) by lot automatically.
  • You can reconcile quickly by importing settlement or date-range reports and mapping Amazon’s “transaction types” directly to your Beancount expense accounts.

The Amazon Fee Map (US Marketplace)

Here’s a breakdown of the most common fees you'll see in 2025.

Selling Plan Fee

This is your basic subscription fee for accessing the marketplace.

  • Individual Plan: No monthly fee. Instead, you pay $0.99 for each item you sell.
  • Professional Plan: A flat $39.99 per month, which waives the per-item charge. This is the standard choice for any serious seller. All other selling fees apply on top of this.

Referral Fee

This is Amazon's commission for each sale.

It's a percentage of the item’s total sales price (including shipping and any gift wrapping). The rate depends entirely on the product category. Most categories fall in the 8–15% band, but some use tiered rates (e.g., 15% on the first $500 and 8% on the portion above that). Certain categories also have a minimum referral fee, often $0.30. Always check the current rate card for your specific category.

Closing Fee (Media Categories)

If you sell media items like Books, Music, Video, or DVDs, Amazon charges an additional flat $1.80 per-item closing fee.

FBA Fulfillment Fees

These are the per-unit pick, pack, and ship fees for using Fulfillment by Amazon (FBA). The cost varies based on the item's size and weight. Amazon updates these rate cards periodically. For 2025, non-peak rates reverted to 2024 non-peak levels on January 15, 2025. Always consult the current FBA rate card to find your product's exact size tier and associated fee.

Monthly Storage & Aged-Inventory Surcharge (FBA)

Amazon charges for the space your inventory occupies in their fulfillment centers.

  • Monthly Storage: Billed by the cubic foot.
  • Aged-Inventory Surcharge: An additional monthly fee assessed on inventory that has been sitting in a fulfillment center for too long. This stacks on top of the regular monthly storage fee.

Inbound Placement Service Fee (FBA)

This is a per-unit fee tied to how you send inventory to Amazon. It's designed to cover the costs of Amazon distributing your products across its fulfillment network. Certain programs, like "New Selection," may temporarily exempt new products up to set limits.

Low-Inventory-Level Fee (FBA)

This fee applies to standard-size products with consistently low inventory levels relative to customer demand. Amazon measures this with a metric called "historical days of supply." If your stock level for a popular item drops below the threshold (generally 28 days), this fee kicks in.

Returns Processing Fee (FBA)

For products in categories with higher-than-typical return rates (like apparel and shoes), Amazon can charge a returns processing fee on each customer return. Some "New Selection" units are waived from this fee up to a certain cap.

Refund Administration Fee

When you issue a customer a refund for an order, Amazon gives you back the referral fee you paid. However, they keep a portion of it as a processing fee. This is the lesser of $5.00 or 20% of the referral fee for that item.

High-Volume Listing Fee (Huge Catalogs)

This fee only affects sellers with massive catalogs. If you have more than 1.5 million active SKUs, Amazon charges a monthly fee of $0.001 per eligible SKU above that threshold.

Note: Rates and policies can differ by country, region, and category. Always review your local Seller Central help pages before booking.


How These Fees Show Up in Your Reports 🧾

You can find all this data in Seller Central. The two most useful reports for accounting are:

  1. Date Range Reports (Payments → Date Range Reports): These provide a summary of your income, expenses, taxes, and net transfers for a specific period. They are perfect for high-level ledger import and reconciliation.
  2. Settlement Files (e.g., Flat File V2): These files break down every single transaction, showing the fee type, order ID, amount, and date. This is the granular data you'll use to map everything correctly.

A Beancount-First Way to Record Amazon Activity

Here’s how to translate Amazon's complex world into clean, simple Beancount entries.

1. Set Up a Minimal Chart of Accounts

First, define the accounts you'll need. This simple structure covers everything.

; --- ASSETS ---
Assets:Amazon:Clearing ; Your Amazon "wallet"
Assets:Bank:Checking ; Where payouts land
Assets:Inventory:SKU:<code> ; One sub-account per SKU

; --- INCOME & COGS ---
Income:Sales:Amazon
Expenses:COGS:Inventory

; --- EXPENSES ---
Expenses:Marketplace:Amazon:Referral
Expenses:Marketplace:Amazon:FBAFulfillment
Expenses:Marketplace:Amazon:Storage:Monthly
Expenses:Marketplace:Amazon:Storage:Aged
Expenses:Marketplace:Amazon:InboundPlacement
Expenses:Marketplace:Amazon:LowInventoryLevel
Expenses:Marketplace:Amazon:ReturnsProcessing
Expenses:Marketplace:Amazon:Other ; For misc. fees

Beancount’s ability to track inventory lots and cost basis is a superpower. You'll "buy" inventory into Assets:Inventory:SKU:... with a cost {...}. When you sell, Beancount automatically calculates the Cost of Goods Sold.

2. Book Each Sale and Its Fees

Let's record a $30 FBA sale for SKU:WATER-BOTTLE. The referral fee is $4.50, FBA fulfillment is $4.24, and you incurred a $0.15 low-inventory fee. You originally purchased this unit for $5.00.

2025-02-10 * "Amazon Order 113-2233445-6677889" "WATER-BOTTLE"
Assets:Amazon:Clearing 21.11 USD
Income:Sales:Amazon -30.00 USD
Expenses:Marketplace:Amazon:Referral 4.50 USD
Expenses:Marketplace:Amazon:FBAFulfillment 4.24 USD
Expenses:Marketplace:Amazon:LowInventoryLevel 0.15 USD
Assets:Inventory:SKU:WATER-BOTTLE -1 SKU:WATER-BOTTLE {5.00 USD}
Expenses:COGS:Inventory 5.00 USD

Why it balances: The $30 sale is credited to Income. The fees ($4.50 + $4.24 + $0.15) and the COGS ($5.00) are debited to your expense accounts. The net cash from the sale, $21.11, is debited to your Assets:Amazon:Clearing account. The inventory asset is credited (reduced by one unit), and the corresponding cost is expensed.

3. Record the Payout

When Amazon disburses your funds, the transaction is simple. You're just moving money from your Amazon "wallet" to your actual bank account.

2025-02-15 * "Amazon Payments" "Settlement disbursement"
Assets:Bank:Checking 2,500.00 USD
Assets:Amazon:Clearing -2,500.00 USD

After each payout, your Assets:Amazon:Clearing account balance should trend back toward zero. Use your date-range report totals to spot any discrepancies.

4. Handle Storage, Aged Inventory, and Inbound Placement

These fees often appear as separate lines in your settlement reports. Book them as direct debits to your clearing account.

2025-03-15 * "Amazon FBA Storage Fees" "Monthly + aged inventory"
Expenses:Marketplace:Amazon:Storage:Monthly 125.40 USD
Expenses:Marketplace:Amazon:Storage:Aged 35.20 USD
Assets:Amazon:Clearing -160.60 USD

2025-03-20 * "FBA Inbound Placement Service" "Shipment split optimization"
Expenses:Marketplace:Amazon:InboundPlacement 62.00 USD
Assets:Amazon:Clearing -62.00 USD

5. Refunds & Returns

When a customer returns a product, you reverse the sale and the COGS, and account for any non-refundable fees. For this $30 sale, let's say Amazon keeps a $0.30 refund administration fee.

2025-03-02 * "Refund 113-2233445-6677889" "Refunded WATER-BOTTLE"
Assets:Amazon:Clearing -29.70 USD ; Net debit
Income:Sales:Amazon 30.00 USD ; Reverse the sale
Expenses:Marketplace:Amazon:Other 0.30 USD ; The refund admin fee
Assets:Inventory:SKU:WATER-BOTTLE 1 SKU:WATER-BOTTLE {5.00 USD}
Expenses:COGS:Inventory -5.00 USD ; Reverse the COGS

Here, you debit Income to reverse the revenue, and credit Expenses:COGS to reverse the cost. The inventory unit is added back to your asset account. The net effect on your Assets:Amazon:Clearing is the amount refunded to the customer.


Importing & Reconciling Quickly

The key to efficiency is mapping. Export a Date Range Report or a Flat File V2 settlement report from Seller Central. Then, create a simple mapping from Amazon's transaction-type column to your expense accounts:

  • OrderIncome:Sales:Amazon
  • CommissionExpenses:Marketplace:Amazon:Referral
  • FBA-fulfillment-feeExpenses:Marketplace:Amazon:FBAFulfillment
  • StorageFeeExpenses:Marketplace:Amazon:Storage:Monthly
  • AgedInventorySurchargeExpenses:Marketplace:Amazon:Storage:Aged
  • InboundPlacementFeeExpenses:Marketplace:Amazon:InboundPlacement
  • LowInventoryLevelFeeExpenses:Marketplace:Amazon:LowInventoryLevel

For those looking to automate, Beancount’s import ecosystem (like beancount-import) is fantastic. You define the rules once, and your settlement files can be ingested into your ledger automatically.


Practical Guardrails That Save Money (and Keystrokes) 💰

  • Avoid the Low-Inventory Fee: Watch your historical days of supply. Keep enough buffer stock to meet demand, but don't overdo it and trigger aged-inventory surcharges.
  • Use New Selection Benefits: When launching new products, enroll them in the New Selection program to get temporary waivers on returns processing and inbound placement fees.
  • Check Referral Rates Before Pricing: A small price change could push you over a fee threshold, significantly impacting your net margin. Confirm your category's referral rates and minimums.
  • Reconcile Monthly: Pull a Date Range Report every month. This simple habit helps you catch any fee changes from Amazon early and ensures your ledger remains trustworthy.

Ready-to-Use Beancount Template

To help you get started, I've prepared a starter ledger file. It includes:

  • A sensible Amazon chart of accounts.
  • Inventory configured as commodities for automatic, lot-based COGS.
  • Example entries for sales, fees, storage, refunds, and payouts.

➡️ Download the Template (Open the file in your editor, replace the sample SKU and amounts, and start importing settlement lines.)


References & Further Reading


One Last Tip

If you sell internationally, create marketplace-specific sub-accounts (e.g., Expenses:Marketplace:Amazon:Referral:US, ...:Referral:CA). Set your main operating_currency in Beancount to your home currency. Once your data is structured, Beancount's query language makes it trivial to analyze your fee mix by marketplace, category, or SKU.

Happy booking!

What is Accounts Payable? A Beancount-Friendly Guide for Tracking Vendor Bills in Plain Text

· 8 min read
Mike Thrift
Mike Thrift
Marketing Manager

Accounts payable (AP) is the money your business owes to its suppliers for goods or services you’ve already received but haven't paid for yet. In the world of accounting, AP is classified as a current liability on your balance sheet—an amount typically due within the next year, and often within 30 to 60 days.

This concept is central to accrual accounting, where you record the expense and the corresponding liability the moment a bill arrives, not when you actually send the cash. This guide will show you how to manage the entire AP workflow cleanly and efficiently using the plain-text accounting tool, Beancount.

2025-08-20-what-is-accounts-payable


Quick Summary

Before we dive into the details, let's cover the essentials:

  • Accounts Payable (AP) represents your short-term debts to vendors. You'll find it under the Liabilities section of your balance sheet.
  • Accrual vs. Cash: AP is a concept that exists only if you keep your books on an accrual basis. Beancount fully supports accrual workflows, and its web interface, Fava, will display your liabilities correctly.
  • AP vs. AR: It's simple: Payables are what you owe, while Receivables (AR) are what others owe you.

Where AP Lives in Beancount (and Fava)

To start tracking AP, you first need to declare an account for it in your ledger. A standard convention is:

Liabilities:AccountsPayable

You can optionally create subaccounts for major vendors (e.g., Liabilities:AccountsPayable:ForestPaintSupply).

In Fava, this account will appear on your Balance Sheet under Liabilities. You can click on it to drill down and see a list of all open and paid items, giving you a clear view of your obligations. You can even see this in action in Fava's public example ledger, which includes a Liabilities:AccountsPayable account.


Beancount Building Blocks You’ll Use

A robust AP workflow in Beancount relies on a few core features:

  1. Accounts: You'll primarily use your Liabilities:AccountsPayable account, a cash account like Assets:Bank:Checking, and your various expense accounts (e.g., Expenses:Supplies).
  2. Metadata: You can attach key-value data to any transaction. For AP, you'll use metadata like invoice:, due:, terms:, and document:. Fava even recognizes the document: key and will automatically create a clickable link to the attached file if you configure a documents folder.
  3. Tags & Links: Use #tags (like #ap) for easy filtering and ^links (like ^INV-10455) to programmatically tie a bill and its subsequent payment together. This creates a clear, auditable trail.
  4. Queries (BQL): Beancount's SQL-like query language (BQL) allows you to run powerful reports, like listing all open payables sorted by due date, directly from the command line with bean-query or on Fava's "Query" page.

Core AP Workflow in Beancount

Managing AP in your ledger involves two or three key steps: recording the bill, paying it, and sometimes handling partial payments or discounts.

1) Record the Vendor Bill (This Creates the Liability)

First, you book the expense and create the payable when the invoice arrives.

; Optionally set your documents folder in your main Beancount file:
option "documents" "documents"

2025-08-05 * "Forest Paint Supply" "Paint order INV-10455" ^INV-10455 #ap
invoice: "INV-10455"
due: "2025-09-04"
terms: "2/10, n/30"
document: "invoices/2025-08-05-forest-paint-INV-10455.pdf"
Expenses:Supplies:Paint 500.00 USD
Liabilities:AccountsPayable -500.00 USD

This single entry accomplishes two critical things:

  1. It immediately recognizes the $500 expense in the correct period (August).
  2. It creates a corresponding $500 liability, showing that you owe money to Forest Paint Supply.

The ^INV-10455 link is a unique identifier that lets you attach the same link to the payment later, keeping the bill and payment transactions logically connected.

2) Pay the Bill (This Clears the Liability)

When you pay the invoice, you create a transaction that moves money from your bank account to clear the liability.

a) Standard Payment (No Discount):

2025-09-01 * "Forest Paint Supply" "Payment INV-10455" ^INV-10455
Liabilities:AccountsPayable 500.00 USD
Assets:Bank:Checking -500.00 USD

This entry reduces your AP balance by $500 and your checking account balance by the same amount. The liability is now cleared.

b) Early-Payment Discount (e.g., "2/10, n/30"):

If the terms are "2/10, n/30", you can take a 2% discount if you pay within 10 days. For our 500invoice,thatsa500 invoice, that's a 10 discount. Here are two acceptable ways to record it—just pick one method and be consistent.

; Option 1: Record the discount as other income (a contra-expense effect)
2025-08-12 * "Forest Paint Supply" "Early payment discount INV-10455" ^INV-10455
Liabilities:AccountsPayable 500.00 USD
Assets:Bank:Checking -490.00 USD
Income:Discounts:Payables -10.00 USD

; Option 2: Reduce the original expense directly
2025-08-12 * "Forest Paint Supply" "Early payment discount INV-10455" ^INV-10455
Liabilities:AccountsPayable 500.00 USD
Assets:Bank:Checking -490.00 USD
Expenses:Supplies:Paint -10.00 USD

In both cases, you clear the full 500liability,reduceyourbankbalancebythe500 liability, reduce your bank balance by the 490 you actually paid, and account for the $10 benefit.

3) Handling Partial Payments

Beancount's linking feature makes tracking partial payments simple and clean.

; Invoice for $1,200
2025-08-10 * "Acme Parts" "INV-9001" ^INV-9001
invoice: "INV-9001"
due: "2025-09-09"
Expenses:Parts 1200.00 USD
Liabilities:AccountsPayable -1200.00 USD

; First payment of $400
2025-08-20 * "Acme Parts" "Payment INV-9001 (1/3)" ^INV-9001
Liabilities:AccountsPayable 400.00 USD
Assets:Bank:Checking -400.00 USD

; Final payment of $800
2025-09-05 * "Acme Parts" "Payment INV-9001 (final)" ^INV-9001
Liabilities:AccountsPayable 800.00 USD
Assets:Bank:Checking -800.00 USD

By using the ^INV-9001 link on all three transactions, you can easily filter your journal to see the complete history of this specific bill and its associated payments.


Helpful Queries (BQL)

You can run these queries in Fava’s “Query” tab or from the command line with bean-query.

Tip: The any_meta() function is incredibly useful for pulling metadata fields like invoice: and document: into your query results.

Open AP by Vendor (Balance View):

This query sums up the current outstanding balance you owe to each supplier.

SELECT payee, COST(SUM(position)) AS amount
WHERE account ~ "^Liabilities:AccountsPayable"
GROUP BY payee
ORDER BY payee;

Open AP by Invoice + Due Date:

Get a tidy list of every open bill, sorted by its due date, to help you prioritize payments.

SELECT payee,
any_meta('invoice') AS invoice,
any_meta('due') AS due,
COST(SUM(position)) AS amount
WHERE account ~ "^Liabilities:AccountsPayable"
GROUP BY payee, invoice, due
ORDER BY due, payee;

List Bills with Attached PDFs:

This query finds all your bills and shows the path to the linked document.

SELECT date, payee, any_meta('invoice') AS invoice, any_meta('document') AS file
WHERE account ~ "^Liabilities:AccountsPayable"
ORDER BY date DESC;

Where to See AP in Fava

  • Balance Sheet: Navigate to Balance SheetLiabilitiesAccountsPayable to see the total balance and drill down into the transaction details.
  • Journal: Filter the journal by account:Liabilities:AccountsPayable or a specific link like ^INV-xxxx to see a bill's complete lifecycle.
  • Documents Sidebar: If you use the document: metadata and set the option "documents" directive, you'll see a list of linked documents in the sidebar.

AP Aging, Turnover, and Cash-Flow Awareness

  • Aging Schedule: This report groups your open invoices by how long they’ve been outstanding (e.g., 1–30 days, 31–60 days, 60+ days). In Beancount, the most practical approach is to run the "Open AP by Invoice + Due Date" query above, export the results as a CSV, and bucket them in a spreadsheet or a small Python script.
  • AP Turnover Ratio: This is a quick health check on how fast you pay your vendors. The formula is Total Supplier Purchases ÷ Average AP. A related metric, Days Payable Outstanding (DPO), is roughly 365 ÷ Turnover Ratio.
  • If You Can’t Pay on Time: AP is meant for short-term debt. If a vendor agrees to formal, longer-term repayment, you should reclassify the debt out of AP and into a note payable.
2025-10-01 * "Helix Industries" "Convert overdue AP to 12-month note" ^INV-1110
Liabilities:AccountsPayable 2000.00 USD
Liabilities:NotesPayable -2000.00 USD

Best Practices for AP in a Plain-Text Ledger

  • Go Paperless: Store invoice PDFs in your documents folder and link them with the document: metadata key.
  • Use Links Consistently: Put the unique invoice number in a ^link on both the bill and all associated payment entries.
  • Keep Metadata Tidy: Consistently using invoice:, due:, and terms: improves search, queries, and financial reviews.
  • Accrual All the Way: If you want useful AP reporting, commit to keeping your books on an accrual basis. Beancount and Fava handle this beautifully.

Copy-Paste Starter: Vendor Bill + Payment

; ---- Bill ----
2025-08-05 * "Forest Paint Supply" "Paint order INV-10455" ^INV-10455 #ap
invoice: "INV-10455"
due: "2025-09-04"
document: "invoices/2025-08-05-forest-paint-INV-10455.pdf"
Expenses:Supplies:Paint 500.00 USD
Liabilities:AccountsPayable -500.00 USD

; ---- Payment (no discount) ----
2025-09-01 * "Forest Paint Supply" "Payment INV-10455" ^INV-10455
Liabilities:AccountsPayable 500.00 USD
Assets:Bank:Checking -500.00 USD

This guide is for educational purposes and does not constitute tax, legal, or financial advice.

References & Further Reading: