Create a new company choose an accounting method in peachtree

Let's create a new company in Peachtree and choose an accounting method.

Company Information:

Company Name: Green Earth Landscaping Company Type: Service-Based Business Industry: Landscaping and Lawn Care Location: Anytown, USA

Accounting Method:

For Green Earth Landscaping, we will choose the Accrual Basis of Accounting. This method recognizes revenues and expenses when earned or incurred, regardless of when the cash is received or paid.

Why Accrual Basis?

The accrual basis of accounting is suitable for Green Earth Landscaping because it matches revenues with the expenses incurred to earn those revenues. This method provides a more accurate picture of the company's financial performance and position. For example, if the company provides landscaping services in December but doesn't receive payment until January, the accrual basis would recognize the revenue in December, when the service was provided, rather than in January, when the cash is received.

Peachtree Setup:

To set up Green Earth Landscaping in Peachtree, follow these steps:

  1. Launch Peachtree and click on "Company" > "Setup" > "Company Information".
  2. Enter the company name, address, and other relevant information.
  3. Choose the accounting method: Select "Accrual" as the accounting method.
  4. Set the fiscal year: Choose the fiscal year end date (e.g., December 31).
  5. Set the accounting period: Choose the accounting period (e.g., monthly).
  6. Set the currency: Choose the currency (e.g., US Dollar).
  7. Set the tax authority: Choose the tax authority (e.g., Internal Revenue Service).

Initial Setup:

After setting up the company, you'll need to set up the following:

  1. Chart of Accounts: Create a chart of accounts that includes the necessary accounts for a service-based business, such as:
    • Asset accounts: Cash, Accounts Receivable, Equipment, etc.
    • Liability accounts: Accounts Payable, Notes Payable, etc.
    • Equity accounts: Common Stock, Retained Earnings, etc.
    • Revenue accounts: Service Revenue, etc.
    • Expense accounts: Salaries, Rent, Utilities, etc.
  2. Accounts Payable and Accounts Receivable: Set up accounts payable and accounts receivable to track the company's outstanding debts and credits.
  3. Payroll: Set up payroll to track employee salaries, benefits, and taxes.
  4. Inventory: If Green Earth Landscaping sells products, set up inventory to track the quantity and value of products on hand.

By choosing the accrual basis of accounting and setting up the company in Peachtree, Green Earth Landscaping will be able to accurately track its financial performance and position, making it easier to make informed business decisions.