13.2. Initial Setup

To set up GnuCash to handle accounts payable for a company, two preliminary things must be done. The first is to build an appropriate Account Hierarchy and the second is to register the company in GnuCash.

13.2.1. Account Setup

There are many different ways to set up a business account hierarchy. You can start with the Business Accounts setup which is available from the New Account Hierarchy assistant, or you could build one manually. To access the prebuilt Business Accounts, start GnuCash and click on FileNew File and proceed until you see the list of available accounts, select Business Accounts.

The prebuilt Business Account hierarchy will not meet your needs exactly. You will need make adjustments for the hierarchy to function well with your particular situation. It should be close enough that it is recommended you begin with it.

Accounts Payable (or A/P) refers to products or services bought by your company for which payment has not yet been sent. This is represented on the balance sheet as a liability because you will have to pay for them. To use GnuCash’s integrated accounts payable system, you must first setup an account of the A/Payable type. The A/Payable account is usually a sub-account under Liabilities. It is within this account that the integrated A/P system places transactions.

Basic A/P Account Hierarchy:

   -Accounts Payable
   -AP Expenses

You need to add additional asset accounts and real expense accounts to make this hierarchy useful. The important aspects of this hierarchy are that you need an expense account and an Accounts Payable account, with account type set to A/Payable.

13.2.2. Company Registration

After you have built the account structure, register the GnuCash file as belonging to your company. To register your company, select FileProperties:

  • Enter the name of your company along with contact information such as your phone number, fax number, e-mail address and website URL.

  • Enter your company’s tax payer id number in the Company ID field.