21 posts tagged with "financial management"

If you keep immaculate books in Beancount, you already think in systems. You appreciate precision, automation, and a single source of truth. This guide turns that disciplined mindset into an 11-step, practical workflow for establishing and growing business credit. We'll map each critical step to simple, automatable Beancount habits, transforming your ledger from a historical record into a forward-looking tool for financial strength.

The 2025 Quick Primer: What Actually Matters​

The world of business credit can feel opaque, but the principles for 2025 are straightforward. Here’s what you need to know before you start.

First, separate your identities. The absolute foundation of business credit is a distinct legal entity (like an LLC or corporation) with its own, separate bank accounts. Co-mingling personal and business funds is the fastest way to be denied business credit.

Next, get an Employer Identification Number (EIN). This is your business's social security number for tax purposes. It is always free and you should apply for it directly with the IRS—never pay a third-party site for this service.

Then, understand how you’ll be scored. Unlike consumer credit's unified FICO score, business credit is measured by several bureaus, each with its own methodology:

• Dun & Bradstreet PAYDEX® (1–100): This score is almost entirely driven by your payment history with vendors and suppliers. A score of 80 is considered on-time, while anything higher indicates you pay your bills early.
• Experian Intelliscore Plus (1–100): This is a predictive score that forecasts the likelihood of serious delinquency. It analyzes payment trends, public records, and other company data.
• FICO® SBSS (Small Business Scoring Service): This score is critical for accessing SBA 7(a) "Small Loans." As of 2025, the Small Business Administration (SBA) lists a minimum prescreen score of 165.

Finally, know that monitoring is fragmented. Scores differ by bureau, and accessing your full reports often costs money. Before paying for a report, try to verify which score a specific lender or vendor uses.

Heads-up: A quick note on identifiers. If you plan to sell to the U.S. federal government, the Unique Entity ID (UEI) replaced the D-U-N-S number in the SAM.gov system on April 4, 2022. However, for building your business credit file with Dun & Bradstreet, the D-U-N-S number is still essential.

The 11 Steps (and the Beancount Moves That Make Them Stick)​

1. Formalize the Entity and Separate Money Flows​

This is the non-negotiable first step. Form a legal entity, open a dedicated business checking account, and keep personal funds out. This creates a clean financial history that credit bureaus can track.

Beancount Move: Your ledger should explicitly reflect this separation from day one. Open distinct accounts for the business and document initial capitalization cleanly.

2025-01-01 open Assets:Bank:Checking:Business      USD
  institution: "Bank of Example"
2025-01-01 open Equity:Owner:Contributions         USD

2025-01-05 * "Owner Capitalization"
  Assets:Bank:Checking:Business        10000 USD
  Equity:Owner:Contributions

2. Get Your EIN (Free) and File It in Your Repo​

Apply directly at IRS.gov. Once you receive your EIN confirmation letter (SS-4), store a digital copy in a docs/ directory alongside your ledger. This keeps critical identity documents version-controlled and accessible.

Beancount Move: Use metadata at the top of your ledger file to record the EIN and link to the source document.

; organization-id: "EIN 12-3456789"
; documents: "docs/tax/SS-4.pdf"

Tip: Beware of search-ad "EIN helpers" that charge fees or harvest your data. Always verify you are on a .gov domain before entering sensitive information.

3. Claim Your D-U-N-S® Number​

A D-U-N-S number links your company to its Dun & Bradstreet credit file, which vendors and lenders use to assess your reliability. Go to the D&B website to claim or update your company's record for free.

Beancount Move: Just like your EIN, add your D-U-N-S number to your ledger's metadata. You can also link to an internal checklist for vendor onboarding to ensure you're always providing consistent information.

; duns: "123456789"
; vendor-onboarding-checklist: "docs/credit/dnb-checklist.md"

4. Open a Business Credit Card and Use It Prudently​

A revolving business credit card is a powerful tool, as issuers often report your payment history to business bureaus. Use it for regular expenses, keep your utilization modest (ideally under 30%), and never, ever miss a payment.

Beancount Move: Model your credit card as a liability. Use metadata to note which bureaus it reports to. Track purchases and, crucially, payments from your business checking account.

2025-01-01 open Liabilities:Credit:BizCard:BankCo  USD
  reports_to: "Experian, Equifax (varies)"

2025-02-04 * "Laptop (business card)"
  Assets:Equipment:Computers          1600 USD
  Liabilities:Credit:BizCard:BankCo

2025-02-15 * "BizCard payment (keep util <30%)"
  Liabilities:Credit:BizCard:BankCo    1200 USD
  Assets:Bank:Checking:Business       -1200 USD

5. Establish Vendor Net-30 Trade Lines That Report​

This is the fastest path to building a strong PAYDEX score. Find vendors that offer payment terms (e.g., Net-30) and confirm that they report your payment history to bureaus like D&B. Office supply, packaging, and shipping companies are common starting points.

Beancount Move: Track each vendor invoice in your Accounts Payable (Liabilities:AP). When you pay the invoice, record the transaction and consider adding a tag to track your payment habits.

2025-02-03 * "Acme Packaging — Net30"
  invoice: "INV-2025-023"
  Expenses:COGS:Packaging              525.00 USD
  Liabilities:AP:AcmePackaging

2025-02-27 * "Pay Acme INV-2025-023 (paid early)"
  Liabilities:AP:AcmePackaging         525.00 USD
  Assets:Bank:Checking:Business       -525.00 USD
  ; tag: net30-early

6. Pay on Time or Early to Target PAYDEX ≥ 80​

D&B explicitly maps a PAYDEX score of 80 to "prompt/on-time" payments. Scores above 80 signify early payments. If your cash flow allows, paying invoices 10–20 days before the due date can significantly boost your score.

Beancount Move: This is a process, not a transaction. Set up a recurring reminder (e.g., a cron job or a Makefile task) that queries your open Liabilities:AP accounts and flags invoices that are due in the next 30 days, prompting you to schedule payments early.

7. Keep Business Identity Consistent Everywhere​

Use the exact same legal name, address, phone number, and industry codes (like NAICS) across your bank accounts, IRS filings, insurance policies, and credit bureau profiles. Inconsistencies can lead to fragmented credit files or mismatches.

Beancount Move: Establish a single source of truth for this data in your ledger's top-level metadata.

; company-legal-name: "Acme Robotics, Inc."
; naics: "541511"
; address: "123 Market St, Springfield, ST 12345"

8. Monitor Your Business Credit and Dispute Errors​

Business credit reports are less standardized and regulated than consumer reports, making errors more common. Periodically pull your reports from the major bureaus and dispute any inaccuracies immediately.

Beancount Move: Maintain a directory for docs/credit/ where you store PDFs of your credit reports and any dispute correspondence. You can link to these documents directly from transactions that were misreported, creating an auditable trail.

9. Graduate to Bank Lines and SBA Options (When Ready)​

Once you have a solid history of on-time payments, you can approach banks for lines of credit or apply for SBA-backed loans. For SBA 7(a) Small Loans, lenders use the FICO SBSS score, and the current minimum prescreen is 165. Keep your personal credit clean as well, as it's often a factor.

Beancount Move: Use your ledger to track key financial metrics that lenders care about, like your Debt Service Coverage Ratio (DSCR) or cash buffer days. You can define these as custom metadata and run queries against your ledger to see if you meet a lender's covenants before you even apply.

10. Automate the Habits That Move Scores​

Good credit is the result of consistent habits. Set up autopay for at least the minimum payment on business credit cards. Schedule a weekly time block to run your A/P. Regularly review A/R aging to protect your cash flow. Systematize the behaviors that lead to good scores.

Beancount Move: Document your financial policies as metadata. This serves as a reminder and a checklist for your operations.

; policy:
; - autopay: "Liabilities:Credit:BizCard:BankCo:min"
; - payables-run: "weekly, Mondays"
; - target-utilization: "<30%"

11. Keep Learning Your Scores’ Dials​

Finally, understand what drives each score so you can focus your efforts:

• PAYDEX (D&B): Driven almost entirely by payment timeliness and the number of trade lines reporting.
• Intelliscore (Experian): Influenced by payment trends, public records (liens, judgments), and firmographics (age of business, industry risk).
• SBSS (FICO/SBA): A blended model using business credit, personal credit, and business financials. Used heavily for SBA 7(a) loans.

A Compact Beancount Starter for Credit-Building​

Here is a minimal credit.beancount file to get you started on tracking these activities in a structured way.

option "operating_currency" "USD"

; --- Accounts ---
2025-01-01 open Assets:Bank:Checking:Business      USD
2025-01-01 open Assets:Equipment                   USD
2025-01-01 open Liabilities:AP:Vendors             USD
2025-01-01 open Liabilities:Credit:BizCard:BankCo  USD
2025-01-01 open Expenses:COGS:Packaging            USD
2025-01-01 open Expenses:Office:Supplies           USD
2025-01-01 open Income:Sales                       USD
2025-01-01 open Equity:Owner:Contributions         USD

; --- Identity (metadata you can query) ---
; EIN: 12-3456789
; DUNS: 123456789
; NAICS: 541511
; address: "123 Market St, Springfield, ST 12345"

; --- Example workflow ---
2025-02-03 * "Acme Packaging — Net30" "Boxes for March"
  invoice: "INV-2025-023"
  vendor_duns: "987654321"
  Expenses:COGS:Packaging              525.00 USD
  Liabilities:AP:Vendors

2025-02-27 * "Pay Acme INV-2025-023 (early)"
  Liabilities:AP:Vendors               525.00 USD
  Assets:Bank:Checking:Business       -525.00 USD

2025-03-04 * "Laptop (business card)"
  Assets:Equipment                    1600.00 USD
  Liabilities:Credit:BizCard:BankCo

2025-03-15 * "BizCard payment (util <30%)"
  Liabilities:Credit:BizCard:BankCo    1200.00 USD
  Assets:Bank:Checking:Business       -1200.00 USD

Common Questions​

How many trade lines do I need to generate a D&B score? Dun & Bradstreet requires a sufficient number of verified trade experiences to generate a PAYDEX score. While there's no magic number, the key is having multiple vendors consistently reporting your on-time or early payments.

Where do I check my business credit scores? Each bureau (D&B, Experian, Equifax) offers paid access to reports on their websites. Some third-party services aggregate data, but they may not show the specific score a lender uses. Before paying, ask your potential lender or vendor which credit bureau and score they rely on.

I see sites charging money for an EIN. Are those legit? No. An EIN is always free from the official IRS.gov website. Avoid non-.gov domains and sponsored search ads that pose as official IRS pages; they are designed to charge you for a free service or collect your data.

Recap: The System in One Checklist​

1. Form an entity → Open a dedicated business bank account.
2. Get an EIN (free) → Store the SS-4 document in your code repository.
3. Claim your D-U-N-S number → Align your business identity across all systems.
4. Add a business credit card → Automate payments and keep utilization low.
5. Open 2–3 Net-30 vendor accounts that report → Pay them early to target a PAYDEX score of 80 or higher.
6. Monitor your reports → Dispute any and all inaccuracies with the bureaus.
7. When ready, approach lenders → Keep the SBA's SBSS prescreen minimum of 165 in mind as a benchmark for readiness.

Sources for Further Reading​

• U.S. Small Business Administration: On establishing business credit and the SBA 7(a) Small Loan SBSS minimum.
• IRS: On obtaining an EIN for free.
• Dun & Bradstreet: On PAYDEX scores and D-U-N-S numbers.
• Experian: On Intelliscore Plus and business credit basics.
• Investopedia: On monitoring business credit.
• GSA: On UEI replacing D-U-N-S in SAM.gov.

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

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​

• Beancount Query Language (beancount)
• Importing External Data with Beancount (beancount)
• Fava Budgets (custom "budget" …) (Fava)
• Documents & document Directive (beancount, Fava)
• Balance and Pad Directives (beancount)

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

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:

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.

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.

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:

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 $3,000 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 = $\\frac{\\text{Cost} - \\text{Salvage Value}}{\\text{Useful Life}}$

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

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 $3,000 asset over 36 months, the monthly depreciation is$3000 \div 36 = $83.33$.

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: $3,000 -$2,500 = $500
• You sell it for: $800
• Gain on Sale: $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 (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​

• Beancount.io "Amortization" Guide (Contra-asset approach, Fava plugin, examples).
• Investopedia on Depreciation vs. Accumulated Depreciation (Credit balance rationale).
• IRS Publication 946 (Official rules for MACRS and U.S. tax depreciation).
• beancount-periodic Plugin (Tool for generating periodic transactions).

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.

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 $500 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 $500 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 Sheet → Liabilities → AccountsPayable 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:​

• Beancount documentation on core account types, tags/links, and its query language
• Fava/Beancount notes on accrual accounting and linking documents
• Using any_meta() for querying metadata fields

If your ledger lives in plain text, you already value clarity, control, and reproducibility. Outsourcing your accounting doesn’t have to compromise any of that. On the contrary, when done right, it transforms your Beancount setup into a reliable, documented workflow run by specialists—while you retain full ownership of the data, the repository, and the rules.

This is a practical guide for Beancount users on what to outsource, what to keep in-house, how to structure deliverables, and how to evaluate providers. It’s about delegating the mechanical work without ever giving up control.

Who This Is For​

This guide is for you if you fit one of these profiles:

• Solo founders, indie hackers, and consultants who use Beancount and want to reclaim time spent on the mechanical parts of accounting to focus on building your product or serving clients.
• Finance-savvy engineers who demand tight controls, versioned history, and full auditability but don't want to spend their weekends importing bank statements and reconciling accounts themselves.
• Organizations migrating from an all-in-one vendor who are now prioritizing data custody and reproducibility. Recent, abrupt shutdowns of accounting platforms like Bench have underscored a critical lesson: exit plans and open formats are not optional. (TechCrunch, KSV Advisory Report)

Beancount, Briefly​

For the uninitiated, the Beancount ecosystem is built on a few core components that make it powerful for this kind of workflow:

• Beancount: At its heart, it's a double-entry accounting language specified in plain text. You write human-readable ledger files, commit them to a Git repository, and use a compiler to validate them and generate financial reports. (GitHub)
• Fava: This is the elegant web interface for Beancount. Fava reads your ledger file and gives you interactive balance sheets, income statements, trends, filters, and a powerful SQL-like query language to inspect your data. (Fava Demo)
• beangulp: The modern framework for automating data ingestion. Evolved from Beancount's original importer, beangulp provides the tools to write robust importers that can parse CSV, OFX, QFX, and even PDF statements, turning raw bank data into structured Beancount entries. (GitHub)

A successful outsourcing relationship should preserve and enhance these strengths: version control, a human-readable history, strict validation, and the composability of your tools.

What to Outsource vs. What to Keep​

The key to effective delegation is a clear division of labor. Here’s how to draw the line between tactical execution and strategic ownership.

Great Candidates to Outsource​

These tasks are typically repetitive, rule-based, and time-consuming—perfect for a specialist.

• Statement Collection & Importing: Downloading monthly statements, normalizing various file formats (CSV, OFX, PDF), and running your beangulp importers. This includes maintaining the importer rules as financial institutions inevitably change their statement formats.
• Categorization Assistance: Building heuristics and declarative rules to categorize transactions. They can optionally use tools like smart_importer to predict postings based on historical data, but the final review always remains with a human.
• Reconciliation & Integrity Checks: The meticulous work of posting balance assertions to match your statements, investigating discrepancies, and ensuring the ledger remains error-free.
• Attachments & Document Hygiene: Fetching invoices and receipts, linking them to transactions with metadata, and archiving the source documents in a tidy, reproducible directory tree.
• Month-End Close & Reporting: Preparing the standard suite of reports (P&L, Balance Sheet, Statement of Cash Flows) and providing Fava views or exports for your management updates.
• AR/AP Ops & Payroll Prep: Preparing bills for payment, generating invoices, chasing collections, and staging payroll files for your final review and approval.
• Tax Package Prep: At the end of the year, producing a clean trial balance, supporting schedules, and all the necessary files for your CPA or tax advisor.

Keep In-House (You Own the Intent and Risk)​

These responsibilities are strategic and define the financial backbone of your business. They belong to you.

• Chart of Accounts Design: The structure and naming conventions of your accounts reflect how you think about your business. This is your financial map.
• Core Accounting Policies: Decisions on entity structure, revenue recognition, and capitalization policies have long-term financial and legal implications.
• Final Approvals: You must retain the final say on all cash movements, including payments, payroll runs, and significant journal entries.
• Strategic Finance: Forecasting, budgeting, and defining what "good" looks like for your business are fundamental owner responsibilities.

The Beancount-Native Outsourcing Workflow​

Here’s what a structured, Git-based collaboration looks like in practice.

1) Repository Layout (Example)​

Your repository is the single source of truth. A well-organized structure makes the process transparent and maintainable.

/ledger
  main.beancount        # Main ledger file, includes others
  accounts/             # Chart of Accounts definition
  includes/             # Monthly or yearly transaction files
  prices/               # Price directives for commodities/stocks
  metadata/             # Custom metadata declarations
  plugins/              # Custom Beancount plugins
  documents/            # Bank statements, receipts, invoices
/importers              # beangulp importers + rules
  config.yaml
  bank_x.py
  card_y.py
/scripts
  import.sh             # Orchestration script for importers
  close_month.py        # Month-end validation and reporting script
/reports
  monthly/
  year_end/
/ops
  runbook.md            # How to run the system
  checklist.md          # Procedural checklists (e.g., month-end)
  controls.md           # Documentation of financial controls

2) The Weekly Cycle​

Routine work should follow a predictable rhythm, culminating in a clear deliverable for your review.

1. Ingest: Your provider pulls statements and runs the beangulp importers to stage new transactions.
2. Categorize: They apply categorization rules and, if used, smart_importer suggestions. This is followed by a human review to correct any ambiguities.
3. Reconcile: They add balance assertions to match statement totals and investigate any differences. The use of pad directives should be rare and always require a clear explanation.
4. Document: Relevant documents (receipts, invoices) are attached to transactions.
5. Commit & Propose: The changes are committed with descriptive messages and a pull request is opened for your review, allowing you to see the exact diff of what changed in your books.

3) The Month-End Close (Minimum Viable)​

Closing the books is a critical checkpoint to ensure accuracy and produce reliable reports.

• Update price directives for any foreign currency or market-based securities.
• Review outstanding items: accounts receivable, accounts payable, accruals, prepaid expenses, and loans.
• Validate that all balance assertions pass and there are no other failing checks.
• Tag the commit with the closing period (e.g., 2025-08-close) and export the standard reports.
• Publish a Fava snapshot or provide a secure URL for the period.

4) The Year-End Package​

The culmination of the year's work is a tidy, auditable package for your tax preparer. This includes a final trial balance, supporting schedules for key accounts (like fixed assets or inventory), and a reproducible script to regenerate every artifact directly from the Git repository.

Security & Access (Non-Negotiables)​

A professional workflow prioritizes security and your ownership of the data.

• Data Custody First: You own the private Git repository. Your provider should work from a fork and submit pull requests. They should never host the only copy of your ledger.
• Bank Access: Provide read-only access whenever possible. If you must use an aggregator service, create isolated credentials and have a clear process for revoking them.
• Secrets & Encryption: Use tools like GPG or age to encrypt sensitive documents at rest. Enforce multi-factor authentication on all services. Operate on the principle of least privilege.
• Fava Access: You should self-host Fava or run it locally (fava ledger.beancount) and share access for review sessions via a secure tunnel or VPN. Avoid exposing it directly to the public internet.
• Exit Plan: Insist on a "pull the cord" playbook. This should include escrow or guaranteed handoff of all scripts, configurations, and documentation. As recent events show, vendors can disappear overnight; your financial records must not be stranded with them.

What “Good” Deliverables Look Like (Every Month)​

At the end of each month, you should receive two things: a technical artifact and a business summary.

1. A Clean Pull Request Containing:

• All imported and reviewed transactions for the period.
• A diff of any new or modified importer rules.
• Commit messages that summarize key assumptions or manual adjustments.
• A 100% green status on all balance assertions, with a log showing each account has been reconciled.
• Links in the Beancount file to all attached documents, plus a report of any missing documents.
• Updated price directives for investments or foreign currencies.

2. A Management Pack Containing:

• Standard reports: P&L, Balance Sheet, and Statement of Cash Flows.
• Key metrics like cash runway and budget vs. actual variance highlights.
• Direct links to pre-filtered Fava views for deeper, interactive analysis.

Provider Types (And When They Fit)​

Not all providers are the same. Match the provider to your stage and complexity.

• Beancount-Savvy Bookkeeper: Perfect for handling the core workflow: steady importing, categorization, reconciliations, and preparing month-end report packs.
• Boutique Accounting Firm: A good fit if you need additional services like managing AR/AP, payroll coordination, multi-entity consolidation, or tax preparation support.
• Fractional Controller/CFO: The right choice when you need strategic oversight. They help design accounting policies, build financial forecasts, prepare board-ready reporting, and design internal controls.

Engagements are typically structured with a monthly retainer for routine work and an hourly rate for ad-hoc projects.

Interview Questions for Beancount Outsourcing​

When vetting a potential provider, ask specific, technical questions to gauge their expertise.

• Which beangulp importers have you personally built or maintained? Can you show me anonymized examples?
• Will you deliver reproducible scripts and a runbook, or just the final output files?
• How do you enforce data integrity in your process? (Look for answers involving balance assertions, review checklists, and maybe even CI/CD linting).
• Do you use smart_importer? If so, what is your process for reviewing and overriding its predictions?
• How do you propose we structure the Git workflow (e.g., branching strategy, PR templates, commit message conventions)?
• What is your exit plan? What does the data handback process look like to ensure there is zero lock-in?
• How do you run Fava in a secure way for client review sessions?

A Simple Statement of Work (SoW) You Can Copy-Paste​

Use this as a starting point for your engagement agreement.

Scope of Work

- Weekly transaction imports via beangulp; includes rules maintenance for all connected financial institutions.
- Human-reviewed transaction categorization. Use of smart_importer for suggestions is permitted, but entries will not be auto-committed without review.
- Weekly reconciliations against statements, enforced with `balance` assertions. Variance notes will be provided for any unreconciled differences greater than $X.
- Document collection for all significant transactions; attachment hygiene and a monthly missing-documents report.
- Month-end close process, including price updates, accruals checklist, and delivery of Fava report links.
- Year-end package preparation, including a trial balance and supporting schedules for CPA review.

Deliverables

- A monthly pull request tagged "<YYYY-MM>-close" with all checks passing.
- Updates to the `/ops` folder, including diffs for `runbook.md` and `controls.md`.
- Final reports archived in `/reports/monthly` with a summary changelog.

Access & Security

- All work will be performed in the client-owned private Git repository. Vendor access is granted via a dedicated user, and all changes will be submitted via pull requests.
- Credentials will be scoped to read-only access where possible. Multi-factor authentication is required on all shared services.
- Sensitive documents will be stored using client-provided encryption keys and will be purged from vendor systems upon termination.

SLA & Cadence

- A weekly PR with reconciled transactions will be submitted every <Day of Week>.
- The month-end closing PR will be submitted by business day <N> of the following month.
- Standard response time for inquiries is <X> business hours; critical issue response is <Y> hours.

Exit Clause

- Upon termination, the vendor will hand back the complete repository, all scripts, documentation, and a map of all credentials used within <Z> business days. A 2-hour turnover call is included.

Tips That Save Hours (And Future Pain)​

• Name accounts for reconciliation. Structure your account names to include the institution and the last four digits of the account number (e.g., Assets:Bank:Chase:Checking:1234). This makes debugging trivial.
• Assert balances at statement boundaries. Treat each bank statement as a verifiable checkpoint. A balance directive at the end of each statement period ensures errors are caught early and contained.
• Automate price updates. Use Beancount's tools to fetch market prices automatically and record them with price directives. This is essential for accurate investment and foreign exchange reporting.
• Keep rules declarative. Favor writing small, testable beangulp importers over building complex, ad-hoc scripts. Declarative rules are easier to maintain and debug.
• Review with Fava, approve in Git. Use Fava's powerful interface to explore the changes and understand their impact. But the final approval happens by reviewing the diff in a Git pull request. Never let your books become a "black box."

Frequently Used Tools in This Stack​

• Beancount: Core engine and language documentation. (Docs)
• beangulp: The standard for building importers. (GitHub)
• smart_importer: Machine learning-aided predictions for categorization. (GitHub)
• Fava: The indispensable web interface for visualizing your ledger. (Website)

The Bottom Line​

Outsourcing for Beancount users isn’t about “giving up control.” It is the opposite. It’s about codifying your financial processes so that a specialist can execute them reliably on your behalf. You keep the repository, the scripts, the assertions, and the fundamental ability to regenerate any report from scratch. You delegate the work, not the ownership.

Whether you’re running a side hustle from your laptop or scaling a fast-growing startup, you have a few reliable paths to keeping clean, accurate books. But which one is right for you? The best solution depends on your budget, your technical comfort, and how much control you want over your financial data.

Here’s a clear-eyed guide to the seven most common accounting options—what they’re good at, where they struggle, and when a modern solution like Beancount.io is the perfect fit.

1) Excel​

This is often the first stop on the accounting journey for its sheer simplicity and universal availability.

• Good for: Builders and DIY founders who love total control and already know their way around a spreadsheet.
• Pros: The barrier to entry is practically zero, and thousands of free templates are available online. Its flexibility allows you to build custom financial models and track unique workflows that off-the-shelf software can't handle.
• Cons: The biggest drawback is the immense manual workload. Every transaction must be entered and reconciled by hand, which is a massive time sink. Worse, it’s dangerously easy to introduce silent formula errors or typos with no guardrails to catch them. Collaboration and maintaining a clear audit trail are clunky without rigorous discipline.
• Best if… you want a quick, no-frills start for a very simple business and you are exceptionally meticulous.

2) Google Sheets​

The cloud-native cousin of Excel, Google Sheets offers the same core functionality with a collaborative twist.

• Good for: Teams that need simple, shared spreadsheets for tracking income and expenses.
• Pros: Built-in cloud backups and dead-simple sharing are the main advantages. You can work from any device with a web browser, making it accessible for teams on the go.
• Cons: It suffers from the same fundamental flaws as Excel: a heavy manual workload and a high risk of user error. You may also run into compatibility quirks with certain templates and add-ons designed for the Microsoft ecosystem.
• Best if… your team already runs on Google Workspace and you’re willing to accept the trade-offs of a manual system.

3) QuickBooks Online​

For decades, QuickBooks has been the default choice for small businesses looking for dedicated accounting software.

• Good for: Small businesses that want a "classic" SMB software experience with a large ecosystem of integrations.
• Pros: Its signature feature is bank feeds, which automatically pull in transactions from your bank and credit card accounts, drastically reducing manual data entry. It provides a wide range of financial reports out of the box and is supported by a massive community of accountants and app developers.
• Cons: While transactions are imported automatically, the system still requires your weekly attention to categorize expenses and reconcile accounts correctly. The interface can have a steep learning curve, and the cost can grow with add-on features. Most importantly, it creates vendor lock-in, making it difficult to export your financial history if you ever decide to leave.
• Notes & Sources: As QuickBooks promotes, automated bank feeds are a core feature, but you’ll still be responsible for the review and categorization needed to keep your books accurate.

4) Xero​

A popular, modern alternative to QuickBooks, Xero offers similar capabilities with a focus on clean design and user experience.

• Good for: Business owners who prefer a more modern UI but need the same core capabilities as QuickBooks Online.
• Pros: Xero also has robust bank feeds and powerful reconciliation tools that make matching transactions straightforward. Its clean design is often praised by users, and a large number of accountants are fluent in the platform.
• Cons: The lower-priced tiers can have feature gaps (like limits on invoices or bills) that push you toward more expensive plans, and add-ons increase the total cost. And just like QBO, it faces the same "you still do the work" reality when it comes to the final categorization and review.
• Notes & Sources: According to Xero, its automated bank feeds connect to thousands of financial institutions worldwide to power its core reconciliation workflows.

5) Accountants (CPAs)​

Certified Public Accountants are highly trained financial experts who provide strategic advice, tax planning, and compliance services.

• Good for: Tax strategy, navigating complex financial situations, handling audits, and getting one-off advisory.
• Pros: A good CPA provides expert guidance on critical decisions like entity structure, tax optimization, and complex accounting treatments. Their oversight significantly reduces your risk on high-stakes financial matters.
• Cons: Hiring a CPA firm for day-to-day bookkeeping is prohibitively expensive for most small businesses. To be effective, they still need you to provide timely, organized financial records.
• What’s the difference from bookkeepers? In short, bookkeepers record and organize historical transactions, while accountants and CPAs interpret, report, and advise based on that data. (Investopedia, Intuit)

6) Traditional Bookkeepers​

A bookkeeper is a professional responsible for the weekly or monthly task of recording and reconciling your financial transactions.

• Good for: Business owners who want a dedicated person handling the weekly grind of bookkeeping.
• Pros: Human oversight greatly reduces common categorization errors that software alone can miss. At the end of each month, they produce a clean set of financial statements for you to review.
• Cons: This option is costlier than DIY software, with monthly retainers often starting in the hundreds of dollars. The turnaround time for reports and answers depends on your bookkeeper's availability and process.
• Reality Check: For many small businesses, the combination of a great bookkeeper for weekly tasks and periodic CPA support for tax and strategy is a durable and effective combo. (Pioneer Accounting Group)

7) Beancount.io (Plain-Text Accounting, Supercharged)​

This modern approach combines the control of spreadsheets with the automation of software and the precision of double-entry accounting.

• Good for: Developers, finance pros, and detail-oriented founders who demand precision, transparency, and automation without black boxes.
• What it is: Beancount.io is a platform built on the open-source Beancount methodology. Your entire financial ledger lives as human-readable plain text, which the platform transforms into real-time analysis, hosted Fava dashboards, and AI-assisted workflows.
• Why teams choose it:
  • Scriptable & Auditable: Version-control your books with Git. Every single change is reviewable in a diff, just like code.
  • Hosted Fava UI: Instantly generate income statements, balance sheets, and interactive charts directly from your text-based ledger. No manual report building.
  • AI Assistance: Speed up transaction categorization and anomaly detection while keeping humans in the loop for final approval.
  • True Portability: Your core data is a simple text file. You can export it anytime. There is zero vendor lock-in.
• Tradeoffs: There is a learning curve if you’ve never used double-entry accounting in a plain-text format. It's best suited for those who value absolute accuracy and control over the illusion of "push-button" convenience.

Prefer pure open source and self-hosting?​

You can always run the Beancount open-source engine on your own machine and use Fava as the web UI. It’s incredibly powerful and free, but you will be responsible for managing the setup, backups, and data integrations yourself. Beancount.io handles all of that for you.

Quick Comparison (At a Glance)​

How to Choose​

• Want maximum control, auditability, and developer-grade workflows? Choose Beancount.io. You get hosted Fava dashboards, AI assistance, and the freedom of plain-text portability.
• Want someone to “just handle it”? Hire a bookkeeper and keep a CPA on call for taxes and strategic questions.
• Comfortable in traditional SMB software ecosystems? QuickBooks or Xero are fine choices—just be sure to budget time each week to review and reconcile your transactions.
• Just testing the waters on a tight budget? Spreadsheets can work for a short time. Treat them as a stepping stone to a real system, not the final destination.

Why Plain-Text Accounting is Having a Moment​

Plain-text accounting (PTA) tools like Beancount are gaining traction because they emphasize reproducibility, version control, and transparency. These are values that resonate deeply with engineers, data scientists, and finance pros. If you believe your company's books should be as clear and reviewable as your code, you’re in the right place. (plaintextaccounting.org)

Ready to see your ledger come alive?​

Spin up a free Beancount.io workspace, import a small sample of last month’s transactions, and open the hosted Fava dashboard. You'll see your income statement and balance sheet appear instantly—then you can refine your categories with AI assistance.

For decades, the world of business accounting has been dominated by a familiar cast of closed, GUI-based systems like QuickBooks, Xero, and FreshBooks. They have set the standard, offering ease-of-use and visual workflows that cater to non-technical users. But for developers, power users, and anyone who values absolute transparency and control, a radically different approach has emerged: Beancount.io.

This article provides a direct comparison of Beancount.io with traditional accounting software. We'll break down their core differences in philosophy, flexibility, cost, and long-term maintainability to help you decide which system truly fits your needs.

1. Philosophy and Workflow​

The most fundamental difference between these two approaches lies in their core philosophy.

Beancount.io Beancount.io is built on the philosophy of plain-text accounting. At its heart, every single financial transaction is an entry in a simple text file. This "accounting as code" model prioritizes human-readable, version-controllable records. Your financial data lives in a timeless, open format that you own completely—it can never be locked away by a vendor. This workflow is designed for users who are comfortable with code editors, version control systems like Git, and command-line tools.

Traditional Software Traditional accounting platforms are GUI-based and form-driven. You enter data using wizards, dropdown menus, and visual forms. This approach prioritizes immediacy and accessibility, making it easy for non-technical users to get started without a steep learning curve. However, your data is stored in a proprietary format or a cloud database, often requiring complex export and import procedures if you ever decide to migrate to another service.

Verdict: If you prioritize full control, data ownership, transparency, and automation, Beancount.io is the clear winner. If you need a "click and go" interface with a minimal learning curve, traditional software will feel more natural.

2. Flexibility and Customization​

How well can the software adapt to your specific needs?

Beancount.io Being 100% scriptable is Beancount.io’s superpower. It integrates seamlessly with Python, allowing you to connect to any API, automate data fetching from bank feeds, programmatically tag transactions based on complex rules, and generate custom reports tailored to your exact specifications. Your ability to extend and customize is practically infinite, free from any vendor-imposed limitations.

Traditional Software These platforms offer a curated selection of integrations with popular tools like PayPal, Stripe, and various payroll services. While convenient, you are operating within the vendor's walled garden. Customization is limited to what the platform allows, and advanced reporting or automation often requires upgrading to a higher-tier plan or purchasing third-party add-ons. You can work with their APIs, but you'll always be bound by their ecosystem's rules and rate limits.

Verdict: Beancount.io provides unmatched flexibility for developers and technical users. Traditional tools are better suited for standard, plug-and-play workflows with popular business applications.

3. Collaboration and Transparency​

How you work with others and audit your records differs significantly.

Beancount.io Collaboration on Beancount.io is managed through Git. This makes every change to your financial ledger completely transparent and auditable. You can see who changed what, when, and why—just like a code review workflow. This is ideal for distributed teams that already embrace tools like GitHub or GitLab. Furthermore, there are no hidden calculations; every number in a report can be traced back to the exact line-item entry in your ledger file, ensuring complete auditability.

Traditional Software Collaboration is handled through built-in user roles and permissions. You can invite your accountant, bookkeeper, or business partners to access the books directly through the web interface. This is highly effective for businesses that follow a traditional model of financial oversight. The downside is that some internal operations, like tax calculations or automated balance adjustments, can be opaque "black boxes," making it difficult to independently verify the logic.

Verdict: Beancount.io is perfect for teams that value granular auditability and code-style collaboration. Traditional systems are more accountant-friendly for real-time, shared GUI access.

4. Cost and Ownership​

The financial models and the concept of data ownership are worlds apart.

Beancount.io The core Beancount software is open-source and free. You only pay for the value-added services of Beancount.io, which include hosting, intelligent automation, and premium features. There are no per-seat licensing fees, so you can scale your team without incurring extra costs. Most importantly, there is zero vendor lock-in. Your data is a collection of text files that you can move, edit, or store anywhere, anytime.

Traditional Software These services operate on a subscription model, typically billed monthly or yearly. Pricing is often tiered based on features, and you may face per-user or per-company fees that scale with your organization. This creates a dependency; if you stop paying, you risk losing access to your data and the software's functionality. This vendor lock-in is a significant long-term risk.

Verdict: Beancount.io is significantly more cost-effective in the long run, especially for technical teams that value data sovereignty. Traditional software offers predictable subscription costs but creates long-term dependency.

5. Learning Curve and Adoption​

How quickly can you get up and running?

Beancount.io The learning curve is undeniably steeper. Adopting this system requires comfort with text-based editing, understanding basic syntax, and familiarity with tools like Git. However, the initial investment pays off. Once mastered, Beancount enables incredibly fast, repeatable workflows and provides a much deeper, foundational understanding of your financial picture.

Traditional Software These platforms are designed for non-technical business owners and offer minimal onboarding friction. You can be up and running, sending invoices and categorizing expenses, within minutes. That said, learning the more advanced features, such as custom report building or setting up multi-entity accounting, still requires a significant time investment.

Verdict: Beancount.io is the right choice if you're willing to invest time in learning a powerful system. Traditional software is faster to start with for non-technical users who need immediate results.

Side-by-Side Comparison​

When to Choose Each​

The decision ultimately comes down to your team's skills, priorities, and workflow.

Choose Beancount.io if you:

• Are a developer, data analyst, or technically-inclined power user.
• Value absolute transparency, control, and long-term data portability above all else.
• Want to fully automate your accounting and integrate it deeply into your custom workflows.
• Are comfortable treating your financial records with the same rigor as source code.

Choose Traditional Accounting Software if you:

• Want a quick-start, visual interface without any technical setup.
• Need to provide immediate, accountant-friendly access with minimal training.
• Prefer a managed, hosted solution where the vendor handles all updates and compliance.
• Your integration needs are met by popular, off-the-shelf apps.

Final Thoughts​

Beancount.io isn’t trying to be a better QuickBooks—it’s a fundamentally different way of thinking. It represents accounting as code. For technical professionals, this shift offers the same leap forward that version control with Git brought to software development: complete transparency, perfect reproducibility, and ultimate control.

At the same time, traditional accounting software continues to win on out-of-the-box ease-of-use and ready-made integrations for non-technical teams. The right choice isn't about which is "better" overall, but which is the perfect fit for your workflow, your priorities, and the degree of control you demand over your financial data.

You formed an S-corp to keep your business lean and tax-efficient. But while the "pass-through" concept sounds simple, the reality involves payroll taxes, potential entity-level charges, and crucial state-by-state differences.

Here’s how the taxes actually work for an S-corp in 2025—and how to keep a clean, audit-proof record in Beancount.

What Gets Taxed (and Where)​

The core of the S-corp structure is how it handles profit. It's a three-part system: pass-through income, entity-level taxes, and payroll taxes.

• Pass-Through at the Federal Level: An S-corp generally pays no federal income tax on its ordinary business profit. Instead, that profit (along with other tax items like credits and deductions) flows through to the shareholders via a Schedule K-1. Shareholders report this income on their personal tax returns, whether or not they actually took the cash out of the business. Crucially, this K-1 profit is not subject to self-employment tax.
• But... Entity-Level Taxes Can Apply: The "no corporate tax" rule isn't absolute. In specific cases, an S-corp may owe tax directly. The most common triggers are the built-in gains (BIG) tax (for recent C-corp conversions) and the excess net passive income tax.
• Payroll Taxes Are Real: This is the most important rule for shareholder-employees. If you work in your business, you must be paid reasonable compensation as W-2 wages before you take any tax-favored distributions. These wages are subject to FICA (Social Security & Medicare) and income tax withholding, just like any other employee's pay.

Payroll, at a Glance (2025) payroll​

For any shareholder-employee, you'll be running payroll and filing standard payroll tax forms, including quarterly Form 941 (for income tax withholding and FICA) and annual Form 940 (for federal unemployment tax, or FUTA).

The key 2025 rates are:

• Social Security (OASDI): The wage base is $176,100. The tax rate is 6.2% for the employee and 6.2% for the employer on wages up to this cap.
• Medicare: There is no wage cap. The rate is 1.45% for the employee and 1.45% for the employer on all wages.
• Additional Medicare Tax: A 0.9% tax is withheld from an employee's wages that exceed $200,000 in a year. There is no employer match for this portion.

Entity-Level Taxes You Might See​

While less common, you must be aware of taxes the S-corp itself might owe.

• Built-in Gains (BIG) Tax: If you converted your business from a C-corp to an S-corp, you face a 5-year recognition period. If you sell appreciated assets that the company held during its C-corp days within this window, the S-corp itself will owe a corporate-rate tax on those gains. This is calculated on Schedule D of Form 1120-S.
• Excess Net Passive Income Tax: This applies if your S-corp has accumulated earnings & profits (AE&P) from a prior life as a C-corp and its passive income (like rents, royalties, and interest) exceeds 25% of its gross receipts.
• Quarterly Estimates for These Taxes: If you expect the total of BIG tax, passive income tax, and certain other recapture taxes to be $500 or more, the S-corp must make quarterly estimated payments. For 2025, the calendar-year due dates are April 15, June 16, September 15, and December 15.

State & Local Gotchas 🗺️​

Never assume federal rules apply at the state or city level. Tax treatment varies widely.

• California: S-corps must pay an $800 minimum franchise tax each year, plus a 1.5% tax on net income.
• New York City: NYC does not recognize the S-corp election. A federal S-corp is generally subject to the full NYC General Corporation Tax.
• Elective Pass-Through Entity (PTE) Taxes: As a workaround to the federal $10,000 SALT deduction cap, many states now allow S-corps to elect to pay state income tax at the entity level. The rules are complex and shifting—talk to your CPA before making a PTE election.

What the Owners Pay​

As a shareholder, your personal tax picture is directly linked to the S-corp's performance.

• K-1 Income on Your 1040: You will report the income, losses, deductions, and credits passed through to you on your Schedule K-1 on your personal Form 1040.
• Quarterly Estimated Taxes: Since your K-1 income doesn't have taxes withheld, you will likely need to make personal quarterly estimated tax payments to the IRS using Form 1040-ES to avoid underpayment penalties.
• The QBI Deduction (Section 199A): Your pass-through income may qualify for the valuable Qualified Business Income (QBI) deduction, which can be up to 20% of your business income. At higher income levels, this deduction can be limited by the amount of W-2 wages the S-corp pays—making your "reasonable compensation" figure even more important.

Baseline Filing & Forms​

At a minimum, your annual compliance will include:

• Form 1120-S: The S-corporation income tax return.
• Schedule K-1: For each shareholder.
• Payroll Forms: Quarterly 941s, annual 940, and W-2s/W-3s for employees.
• Form 1099-NEC: For payments of $600 or more to most independent contractors.

Beancount: Map It So You Never Wonder “Where Did That Go?”​

A clear chart of accounts is essential for tracking these moving parts.

Starter Accounts​

Assets:Bank:Operating
Assets:PrepaidTax:Federal            ; For S-corp level estimated payments
Expenses:Payroll:Wages
Expenses:Payroll:Employer:SocialSecurity
Expenses:Payroll:Employer:Medicare
Expenses:Payroll:Employer:FUTA
Expenses:Tax:Federal:S-Corp          ; For BIG/passive income tax expense
Liabilities:Payroll:Withholding:{Federal,SocialSecurity,Medicare}
Equity:Distributions

Transaction Examples​

Run Payroll (Company side + withholdings)

2025-02-28 * "Payroll - February"
  Assets:Bank:Operating                        -10350.00 USD
  Expenses:Payroll:Wages                         12500.00 USD
  Expenses:Payroll:Employer:SocialSecurity         775.00 USD
  Expenses:Payroll:Employer:Medicare               181.25 USD
  Liabilities:Payroll:Withholding:Federal        -3000.00 USD
  Liabilities:Payroll:Withholding:SocialSecurity  -775.00 USD
  Liabilities:Payroll:Withholding:Medicare        -181.25 USD

Owner Distribution (Non-wage)

2025-03-10 * "Shareholder distribution"
  Assets:Bank:Operating                         -5000.00 USD
  Equity:Distributions                           5000.00 USD

Corporate-Level Estimated Tax (If applicable)

2025-04-15 * "1120-S entity-level estimate (BIG/passive tax)"
  Assets:Bank:Operating                         -1200.00 USD
  Assets:PrepaidTax:Federal                      1200.00 USD

Marking Key Filing Dates

2026-03-15 note "E-filed 2025 Form 1120-S; furnished K-1s to all shareholders."

Sanity Checks (bean-query)​

Use queries to ensure your records are sound.

Wages vs. Distributions YTD (Reasonable Comp Reality Check)

SELECT account, SUM(position)
WHERE (account ~ "Expenses:Payroll:Wages" OR account ~ "Equity:Distributions")
  AND year = 2025
GROUP BY account;

Did We Record the K-1 Handoff?

SELECT date, narration WHERE narration ~ "K-1";

Practical Tips (So the IRS Doesn’t Call) ✅​

1. Document "Reasonable Compensation." Keep a simple memo with your job duties, time allocation, and links to market salary data. Pay this amount via formal W-2 payroll.
2. Separate Wages and Distributions Cleanly. Never mix them. Your Beancount ledger should make the distinction obvious.
3. Watch State Rules. Be aware of minimum taxes (like in CA) or S-corp non-recognition (like in NYC).
4. Revisit Estimates. If your income changes significantly mid-year, adjust both your personal 1040-ES and any S-corp level estimated payments.

This guide provides general information, not tax advice. Every business situation is different. Always consult with a qualified CPA for guidance specific to your circumstances.

The economic tea leaves are in, and they're not exactly screaming "boom." As of July 2025, the latest figures paint a picture of an economy that has decidedly cooled its jets. Let's look at the data.

The Macro Backdrop (July 2025)​

• Inflation: After years of volatility, U.S. consumer prices have settled but remain a factor, running at +2.7% year-over-year as of June 2025 (Bureau of Labor Statistics, Trading Economics). While down from post-pandemic highs, this rate still erodes purchasing power and puts pressure on margins.
• Growth: The long expansion has officially ended. Real GDP slipped by an annualized rate of -0.3% to -0.5% in the first quarter of 2025, signaling a contraction (Bureau of Economic Analysis, Trading Economics).

A tepid economy isn't a crisis—it's a clarion call. It demands sharper visibility into your cash flow, a ruthless approach to costs, and a clear-eyed view of opportunities. This is where plain-text accounting, specifically with Beancount, becomes a strategic advantage. It gives you complete control over your financial data, without the SaaS lock-in or ever-rising subscription fees of commercial software.

Five High-Leverage Levers (and How Beancount Makes Them Easy)​

In a slow-growth environment, small, intelligent actions have an outsized impact. Here are five strategies you can implement immediately with a Beancount ledger.

Automate the Busywork, Guard Your Time​

Your most valuable asset is your time, which should be spent on analysis, not data entry. Beancount’s plain-text nature makes automation a first-class citizen.

• Helper Scripts: The Beancount ecosystem is rich with community-built tools. Price fetchers can pull daily market values for your investments. Importers for services like PayPal, Stripe, or Splitwise can parse statements and append formatted entries to your ledger while you sleep.
• Pre-commit Hooks: If you store your ledger in Git (and you should), you can use a pre-commit hook to run bean-check on every change. This simple script lints your file, catching typos and balancing errors before they ever get committed to your main branch.
• Git = Audit Trail: Every commit is a story. git blame shows you who changed a transaction and when. git log provides a complete, immutable history of your financial decisions. It's the most robust audit trail imaginable.

Build Financial Resilience​

A slow economy rewards the prepared. Use Beancount to build a financial fortress that can withstand uncertainty.

• Emergency Buffer: Make saving non-negotiable. After calculating your monthly profit, create a standing transaction to move a fixed percentage (e.g., 10%) to a dedicated emergency fund.

  ; Assuming July profit was $4,500. 10% = $450.
  2025-07-31 * "Monthly Profit Sweep" "Move 10% of profit to emergency fund"
    Expenses:ProfitSweep          450.00 USD
    Assets:Savings:Emergency
  

  This isn't an expense in the traditional sense, but booking it this way "hides" the cash from your operating accounts, making it less tempting to spend.

• Scenario Modeling: What happens if revenue drops 15%? Or if your costs increase by 5%? With a plain-text ledger, you don't need complex software to find out. Just copy your entire ledger file to a scenarios/ directory, tweak the numbers, and run a report.

  # See the impact on your bottom line in seconds
  bean-report scenarios/pessimistic_q3.bean income_statement
  

Double-Click on Niche Data​

Beancount's flexibility allows you to track anything. Use metadata to enrich your transactions with business context.

2025-07-15 * "The Meow-Box" "Monthly Cat-Toy Subscription"
  Income:Subscriptions          -19.99 USD
  Assets:Bank:Checking
  ; market: "Pet-DTC"
  ; customer-id: "CUST-86753"

With this data embedded directly in your ledger, you can ask sophisticated questions. A simple bean-query can now reveal the total revenue, churn, or lifetime value for your "Pet-DTC" market segment:

bean-query my-ledger.beancount "SELECT SUM(convert(position, 'USD')) WHERE meta('market') = 'Pet-DTC'"

Your Next Steps​

Reading about it is one thing; doing it is another. Here’s how to get started this week:

1. Import Your 2024 Backlog: Get your historical data from 2024 into Beancount. This will make your 2025 reports and year-over-year comparisons truly apples-to-apples.
2. Schedule Two Standing Queries: Save the cash-flow and top-10-expenses queries. Set a calendar reminder to run and review them every Friday. Make it a ritual.
3. Allocate 10% of Profit: Implement the profit sweep. Start with 10% and commit to moving that capital to a separate reinvestment or emergency account each month. Revisit the ratio quarterly.

Slow growth rewards those who see their numbers clearly, act decisively, and build robust systems. With a text ledger, a handful of scripts, and the playbook above, you’ll do more than just survive the downturn—you’ll use it as an opportunity to compound your financial strength.