Keep books with Accounting

A team's admins and its accountants can open Accounting. In Personal, that is you.

Accounting keeps double-entry books for a team or Personal: every journal entry has equal debits and credits.

Records from Magpie's other areas are added to the books automatically whenever an Accounting page is opened. Record anything else with a journal entry.

Set up the books

Open Accounting and choose the date the books start. Use the first day of your financial year, or the day you start keeping books in Magpie. No entry can be dated earlier.

The books start in the team currency; choose another in the sentence below the date if they should be kept in something else. If the team has not chosen a currency, the one you choose becomes the team currency. If it has one, that stays as it is. Neither the start date nor the books' currency can change after setup. The team currency still can, on the team page or, for Personal, in account settings; the books keep theirs.

Setup adds a standard chart of accounts.

The overview

Accounting opens on what needs doing: transactions to review in each bank or card account, bills due within a week, payments waiting to be deposited, records that need an amount or could not be added, and opening balances if they have not been entered. Each links to where it is done. Up to 400 entries are added each time Accounting is opened; when more are waiting, such as just after setting up books with a long history, Add more records to the books adds the next ones. Below that, Cash shows what each bank, card and cash account holds in the books, and This year shows income, expenses and net income so far in the financial year, on the basis Profit and Loss opens with.

Opening balances

Records dated before the books start are not added, so enter what the business had and owed on the start date: each bank balance, what is owed on each card, cash, unpaid invoices, unpaid bills, unsold stock and sales tax not yet paid. Every other asset, liability and equity account is listed after those, such as Equipment, Accumulated depreciation and Loans. Choose Enter opening balances on the overview, or Opening balances in Settings, fill in the amounts and choose Save opening balances. Leave an account blank if it was zero; a negative bank balance is an overdraft.

They are saved as one journal entry on the start date, balanced against Opening balance equity. Saving again reverses that entry and posts the new amounts. Profit or loss from before the books start is part of Opening balance equity; your accountant may move it to Retained earnings.

Move from QuickBooks, Xero or another program

First bring over the chart of accounts. In the other program, export the chart of accounts as a CSV file. In Chart of Accounts, choose Import its chart of accounts, choose the file and Read file. Each account is listed with the type it will have here, found from its type in the file; check them, choose a type for any that was not recognised, and choose Add ticked accounts. Accounts the chart already has, by number or name, are left as they are. The plan's limit on bank and card accounts still applies; any more are added as other assets or liabilities.

Then export the trial balance as of the day before the books start, as a CSV file with Debit and Credit columns. Under Import a trial balance on the opening balances page, choose the file and Import trial balance. Each row is matched to an account by number, then by name, and the amounts are filled in for you to check; nothing is saved until you choose Save opening balances. Income and expense rows are left out, as they are part of Opening balance equity. Rows that match no account are listed: add the account, then import again.

What Magpie adds to the books

Records dated on or after the start date are added:

• Invoices, when issued: the total is owed to you in Accounts receivable, the amount before tax is Services income, and tax goes to Sales tax payable.
• Invoice payments, on the date received: the money moves out of Accounts receivable. A bank transfer goes to Bank, cash to Cash, an online payment to Stripe balance, and a card, cheque or other payment to Undeposited funds until you record its deposit. Settings can send each payment method to a different account. Refunds do the opposite.
• Expenses that are not drafts: the amount goes to an expense account and comes from the account the payment method pays from. With Tax on expenses on in Settings, the tax entered on an expense goes to Sales tax recoverable instead of the expense account. A reimbursable expense is owed in Reimbursements owed, until it is marked reimbursed, when it is paid from Bank or the account chosen in Settings.
• Store orders, when paid: the total goes to Stripe balance, split between Sales, Shipping income and Sales tax payable. The cost of items with a cost per item moves from Inventory to Cost of goods sold. Refunds go to Refunds and discounts.
• Form payments and Supporter payments, and their refunds.
• Stripe fees, including Magpie's fee, come off Stripe balance into Payment processing fees. A paid Stripe payout moves money from Stripe balance to Bank, or to the account chosen in Settings.

When a record changes, Magpie reverses its entry and posts the new amounts. A void invoice or a removed payment or expense has its entry reversed. These entries cannot be reversed by hand; change the record instead. Each one links to the record it came from, and Journal Entries can show just the entries from one area.

A record dated in a closed period is added on the first day after it, with a note of its own date.

Records in another currency

A record in a currency other than the books' is listed under Needs an amount on the Accounting overview. Enter what it was worth in the books' currency, such as the amount that reached your bank, and choose Add. Each line of the entry is converted in the same proportion. If the record changes later, it is listed again until a new amount is entered.

A payment of an invoice in another currency takes out of Accounts receivable the share of the invoice it pays, at the amount entered for the invoice. When the payment was worth more or less than that, the difference goes to Exchange gains and losses: a gain reduces it and a loss adds to it. Until the invoice has its amount, the payment takes out what it was worth, and it is added again with the difference once the invoice's amount is entered.

Choose the accounts records use

In Settings, choose a different account for any of these; entries already added are reversed and posted again to that account:

• Invoice payments: each payment method's money goes to Bank for a bank transfer, Cash for cash, or Undeposited funds for a card, cheque or other payment. Online payments always go to Stripe balance.
• Stripe payouts go to Bank.
• Expense categories: each posts to the expense account with the same name, or to Other expenses. A category for things the business keeps, such as computers, can post to Equipment instead; then add them to Fixed Assets.
• Expense payment methods: each pays from Credit card for a card, Cash for cash, or Bank for the rest. Reimbursements paid from is Bank.

If a record cannot be added, for example because its account was archived, it is listed under Not added to the books on the overview with the reason.

Banking

Banking lists the bank and card accounts: accounts whose detail type is Bank account or Credit card. The books start with Bank and Credit card. Add bank or card account adds another. The free plan includes 2 bank and card accounts; paid plans have no limit.

Import a statement

Download the statement from your bank or card's website as CSV. Open the account, choose Import statement, and choose the file. Magpie shows the first rows and guesses which column is the date, the description and the amount; change any guess that is wrong. Choose Separate money in and money out columns if the statement has two amount columns, and Purchases are positive amounts for a card statement that lists purchases without a minus sign. Then choose Import transactions.

A transaction already imported into the account is skipped, so importing overlapping statements adds each transaction once.

Review transactions

Each imported transaction is listed under For review. Money in is positive. Choose what it was, then Add:

• an account, such as Sales or Software, to add it to the books;
• Transfer to or Transfer from another bank or card account, such as paying off the card;
• an entry Already in the books with the same amount within 10 days, such as a Stripe payout or an invoice payment, so it is not counted twice. Entries whose customer or supplier the description names are listed first;
• Payment for an open invoice, for money in, or Payment of an open bill, for money out: an invoice or bill in the books' currency that still has at least this amount owed. Choosing one records the payment on the invoice or bill, into or out of this account, and matches the transaction to it. A payment less than the balance leaves the rest owed.

To spread one transaction across several accounts, such as a shop receipt that is partly office supplies and partly the owner's, choose Split across accounts under it. Add a line for each account with its amount, as a positive number, and a description if you want one; Left to split shows what remains. The lines must add up to the transaction. A contact, if you choose one, goes on every line. Choose Add split; it is added as one journal entry, and Undo under Done reverses it.

For money in that is several card or cheque payments paid in together, choose Record as a deposit under the transaction instead; see Record a deposit.

When an entry already in the books matches, it is chosen and labelled as a suggestion. Otherwise an open invoice or bill owed exactly the amount is suggested when the description names its customer or supplier, or when no other one is owed that amount; otherwise a matching rule's account. Add all suggested adds every transaction that has one, as suggested.

After Add or Exclude, the row shows what happened and an Undo. Exclude leaves out a duplicate or anything that is not the business's. Under Done, Undo returns a transaction to review and reverses the entry it added, or removes the invoice or bill payment it recorded.

An upload whose columns were never chosen is listed under Imports on the account; open it to finish, or choose Discard upload.

Record a deposit

Card, cheque and other invoice payments wait in Undeposited funds until they reach the bank. A card company or a paying-in slip often puts several of them into the bank as one amount. A deposit moves those payments to the bank account as one entry, so the books show the same amount as the statement.

Under an imported transaction of money in, choose Record as a deposit. When one waiting payment is the same amount, or the payments received in the 10 days before it add up to it, they are already ticked. Tick the payments the deposit is made of. If the card company kept fees before paying out, enter them under Fees kept; they are added to Payment processing fees. The payments ticked less fees must come to the transaction's amount. Choose Record deposit. Undo on the transaction reverses the deposit and the payments wait again.

Without an imported statement, choose Record deposit on the bank account, enter the date, and tick the payments. The entry can be reversed on its journal page, and a transaction imported later can be matched to it.

A deposit can only include payments received on or before its date. The overview lists how many payments are waiting to be deposited.

If a payment changes after it was deposited, such as its date, the deposit still covers it. If its amount goes up, only the extra waits to be deposited. If its amount goes down or it is removed, the deposit took out more than the payments now hold, and the overview shows Undeposited funds is below zero until the payment or the deposit is corrected.

A bank transaction matched to a payment stays matched when the payment changes, unless its amount changes.

Rules

Rules choose an account for transactions whose description contains some text, such as GITHUB for Software. A rule can be for money in, money out, or either. A rule can also name a contact from Contacts, such as the supplier; the entries it adds then count towards that contact in Income by customer and Spending by supplier. Choosing the account a rule suggests by hand also names its contact. Click a rule's text, account or contact to change it. Rules are checked from the top and the first that matches is used; drag a rule or use its arrows to change the order. A rule suggests its account for review, or, with Add automatically on, adds matching transactions as soon as they are imported.

Reconcile an account

Reconciling checks that the books agree with a statement. Open the account, choose Reconcile, enter the statement's last date and ending balance, and choose Start. For a card, the balance is the amount owed.

Tick each entry the statement shows; the cleared balance and the difference update as you tick. When the cleared balance equals the statement balance, the difference is zero and Finish can be chosen. If the statement shows something the books do not have, import or add it, then come back. Cancel removes the ticks.

The next reconciliation starts from the last one's balance. The latest reconciled statement can be reopened to change its ticks.

The chart of accounts

Chart of Accounts lists accounts by type. Each asset, liability and equity account shows its balance today; each income and expense account shows this financial year so far, as the reports do. The types are:

• Assets are what the business owns, such as its bank account.
• Liabilities are what it owes, such as a credit card or sales tax.
• Equity is what belongs to the owners.
• Income is money earned.
• Expenses are money spent to run the business.

Assets and expenses grow with debits. Liabilities, equity and income grow with credits. Balances are shown so that the usual direction is positive.

Choose Add account, enter a name and a type, and choose Add account. The new account opens. Click its name, number or description to change it, or choose a different type or detail type.

Accounts marked Used by Magpie are where Magpie's other areas record invoices, payments and sales. They can be renamed and renumbered, but keep their type and cannot be archived. Any account keeps its type once it has entries.

Archive stops an account being used in new entries and keeps its history. An account with a balance cannot be archived; move the balance to another account with a journal entry first.

Each account's page lists its entries between two dates, starting with the balance before the first date and showing the balance after each entry.

Post a journal entry

Choose New journal entry. Enter the date and a memo, then a line for each account: choose the account and enter a debit or a credit. Add line adds another. Totals under the lines show whether debits equal credits.

For example, money the owner puts into the business is a debit to Bank and a credit to Owner contributions.

Choose Post entry. An entry is refused when debits and credits differ, when a line has no account, or when the date is before the books start or in a closed period. The form opens again with what you entered.

Journal Entries lists every entry, newest first. Search memos or show the entries between two dates.

Correct an entry

Click the memo of an entry entered by hand to change it. Its date, accounts and amounts cannot be changed, and it cannot be deleted. To correct them, open the entry, choose Reverse and choose the date of the reversal. Magpie posts the opposite entry, so the two cancel out, and links them to each other. Post a corrected entry if one is needed.

Use the same date to remove the entry from its period. If that period is closed, choose a later date.

Bills

Bills records what the business owes suppliers. Choose Enter bill and enter the supplier; a name from Contacts links the bill to that contact. Enter the bill's date and number; the due date starts at your invoice payment terms after the bill date, or 30 days. Add a line for each account the bill is spread across, such as Rent or Software, with Add line for more. When the team has Time Tracking projects, a line can name the project its cost belongs to. Put recoverable tax on its own line against Sales tax recoverable. Choose Enter bill; it adds the total to Accounts payable.

On the bill, click the bill number, due date or memo to change it, or the supplier when it is not from Contacts. Record payment pays some or all of the balance from a bank, card or cash account. Remove takes off a payment recorded by mistake and reverses its entry. A bill's amounts and lines cannot be changed: Void reverses the bill, then enter it again. A bill with payments cannot be voided.

A bill payment in the bank can be matched under Banking, so it is not counted twice.

Bills can be found in Search by supplier, bill number or memo. A contact's page lists the bills from that contact under Bills, with Enter bill to enter another with the supplier filled in. Both are shown only to people who can open the books.

A bill in another currency

When a supplier bills in another currency, choose it under Currency and enter the lines in that currency. Also enter Total in the books' currency: what the bill was worth on its date, such as from your bank's rate or the supplier's own conversion. Accounts payable holds that amount, and each line takes its share of it. The bill's balance stays in its own currency.

To pay it, enter the amount in the bill's currency and what left the account in the books' currency. The payment clears its share of the bill at the bill's own amount; the difference goes to Exchange gains and losses. The last payment clears whatever is left, so nothing stays in Accounts payable. Removing a payment reverses its difference too.

Banking does not suggest a bill in another currency for a bank transaction, because its amount in the books' currency is not known until it is paid. Record the payment on the bill, then match the transaction to that entry. A bill in another currency cannot repeat.

Fixed assets

Fixed Assets lists equipment, vehicles and property the business keeps for more than a year, and depreciates them: each one's cost is spread over the years it is used, as an expense, instead of all at once.

Record the purchase as usual, as a bill, an expense or a bank transaction, to Equipment or another account with the detail type Equipment or property. For something the business already had when the books start, include it in the opening balances.

Then choose Add fixed asset and enter its name. Choosing an item from Asset Tracker links it and brings in its purchase date and price, when the price is in the books' currency. On the asset's page, click a detail to change it:

• Cost: what it cost in the books' currency, the same amount its purchase added to its account.
• Depreciation starts: usually the purchase date. The whole of that month is depreciated.
• Method: Straight line takes the same amount each month over its Useful life, in years. Declining balance takes a yearly percentage of the value left, a twelfth each month, so the amount gets smaller over time. Not depreciated suits land.
• Value at the end: what it will be worth when you stop using it, if anything. Depreciation stops there.

When a month ends, Accounting enters that month's depreciation for every asset as one entry dated the month's last day: it adds to Depreciation and takes the same amount off the assets' value in Accumulated depreciation. If you change an asset, its earlier months are entered again to match. Months in a closed period are not changed; the difference is entered on the first open day. Depreciation by year shows each financial year's depreciation and what the asset is worth at its end.

Depreciation from before the books start belongs in the opening balances: the asset's page shows the amount to enter, as a negative amount, for Accumulated depreciation.

When the business sells, scraps or loses an asset, choose Dispose and enter the date. Its cost comes out of its account and its depreciation out of Accumulated depreciation; what it was still worth goes to Gain or loss on disposals. It is not depreciated for the month it was disposed of. If it was sold, record the sale as usual to Gain or loss on disposals, so that account shows the gain or loss. Put back in use reverses a disposal. Remove takes an asset out of Fixed Assets and reverses its depreciation; its purchase stays in the books.

On the cash flow statement, depreciation is added back to net income, because it uses no cash.

Attachments

A bill or a journal entry can have files attached, such as the supplier's bill as a PDF or a receipt for a card payment. Under Attachments, choose Attach files and pick one or more JPG, PNG, WebP or PDF files of up to 10 MB each; they are uploaded at once. Click a file's name to open it, or choose Remove to delete it. A journal entry also lists the files on the bill it came from. For a bank transaction, open the journal entry it added under Done and attach the receipt there.

Anyone who can open the books, including an accountant, can open the files.

Repeating bills and entries

A bill or a journal entry entered by hand can repeat, such as rent each month. Open it, choose Repeat, choose how often (every week, month, 3 months or year), the first date and, if it ends, the last date, and choose Repeat.

When Accounting is opened, a copy is entered for each date that has come, dated that day, with the same supplier or contact, accounts and amounts. A repeating bill's due date is the same number of days after its date as the original's, and its bill number is blank. A date before the books start is skipped; a date in a closed period is entered on the first day after it, with a note of its own date.

Recurring lists everything that repeats, with the next date and how many copies have been entered. Click the name, how often, the next date or the last date to change it. Turn off Repeating to pause it, or choose Remove to stop it; copies already entered stay in the books. If a copy cannot be entered, for example because one of its accounts was archived, it stops at that date and says why, and the overview lists it. Fix the cause and choose Try again.

Reports

Reports has a tab for each report. Choose a range such as This quarter, or Custom dates, and Show. Export PDF downloads the report as it is shown, ready to print or send to an accountant or bank; Export CSV downloads it for a spreadsheet. This year and Last year are financial years, which start on 1 January unless Financial year starts in Settings says otherwise, and This quarter and Last quarter are the financial year's quarters, counted from its first month. Each account links to its entries.

• Profit and Loss: income, cost of goods sold, gross profit, expenses and net income between two dates. Compare with adds a column for the Previous period, the Same dates last year, or shows Each month of the dates in its own column, up to 24 months. A previous period of whole months is the same number of months before. On the Accrual basis, invoices and bills count when they are issued. On the Cash basis, they count when they are paid: a payment of half an invoice counts half its income. Settings chooses which basis the report opens with.
• Balance Sheet: assets, liabilities and equity at the end of a date. Compare with adds the End of the month before or the Same date last year. Net income this year is income less expenses since the start of that date's financial year. Income less expenses from earlier financial years is added to Retained earnings; no journal entry is posted for it.
• Cash flow: where cash came from and went between two dates. It starts with net income and adds the change in every other account: what customers and suppliers owe, stock and tax under operating activities, equipment under investing activities, and loans and owners' money under financing activities. Cash is the bank, cash, Undeposited funds and Stripe balance accounts, and the total is always their change. Opening balances count as where the books start, not as cash coming in. Depreciation and the loss on an asset disposed of are added back to net income under operating activities, because neither moves cash; investing activities show only equipment bought and sold.
• Trial balance: every account's balance, with total debits and credits. Income and expense accounts show the financial year only, and Retained earnings includes earlier years.
• Accounts receivable and Accounts payable: money owed to you on unpaid invoices and money you owe on unpaid bills on a date, grouped by how long past due they are.
• Sales tax: tax charged on sales by tax name, less the tax on sales reversed in the period, such as a voided invoice; recoverable tax paid on purchases; and the net for the period, which is the tax charged less the recoverable tax. Recoverable tax comes from bills and, with Tax on expenses on, from expenses. Payments to the tax authority in the period are shown separately, under the net: they settle what was owed and are not part of it. A payment is a bank transaction added to Sales tax payable, or a journal entry that debits Sales tax payable and credits a bank, cash or card account; a refund from the authority is the same the other way. Opening balances and the entries that record returns are not counted as activity. Check the rules where you file. When you file a return, choose Record return under Returns filed: check the period, enter the date you filed and an optional reference, and choose Record return. Magpie posts an entry on the period's last day that sets the recoverable tax against the tax charged, so Sales tax payable holds what is owed; then add the payment from the bank against Sales tax payable. Close the books through the end of the period, on by default, stops entries in that period changing the figures you filed. Periods cannot overlap. Remove reverses a return's entry; a closed period stays closed. Magpie does not file returns.
• Income by customer and Spending by supplier.
• Profit by project: income, costs and profit for each Time Tracking project. Income comes from invoices billed from a project's time or expenses: an invoice's income is shared between the projects of its lines in proportion to their amounts, after any discount. Costs come from the project's expenses and from bill lines given the project. Income and costs in no project are totalled under Not in a project. Time worked is not counted as a cost.
• Budget against actual: each income and expense account's actual amount beside its budget for the same dates, and the difference. More income or more spending than budgeted is a positive difference. A month only partly in the dates counts in proportion to its days.

Budgets

Budgets has a budget for each financial year. Choose the year, enter what you expect each income and expense account to earn or spend in each month, as positive amounts, and choose Save budget. Same every month copies the first amount in a row into every month, and the Year column adds up the row. Start from last year's actual amounts fills the form with what each account actually had in each month of the year before; nothing is saved until you choose Save budget. Saving again replaces the year's amounts.

Journal Entries has Export lines, a CSV of every line between two dates.

On Dashboard, the assistant can answer questions about the books, such as how much the business made last quarter or who owes it money, for team admins and accountants who are team members. See Use the assistant.

Accountants

An accountant keeps the books with you without joining the team. They can open everything in Accounting and nothing else of the team. Accountant access is on paid plans.

An admin chooses Add accountant under Accountants on the team's Members page, or in Accounting Settings, which also works for Personal, and enters their email address. Someone with a Magpie account at that address gets access at once and an email with a link to the books. Anyone else gets an invitation by email to create an account with that address; it lasts 14 days. Accepting it from that account gives them access. Pending invitations are listed under Accountants, where Resend sends a new link and Revoke stops the old one working.

The accountant opens Accounting and chooses your books under Books at the top of any Accounting page; the page bar then names your team. Entries from invoices and expenses link to a read-only summary of the invoice or expense, because they cannot open Invoicing or Expenses. Receipts stay in Expenses.

Remove takes away their access; an accountant can also remove themselves. If the team moves to the free plan, accountants cannot open the books until it upgrades again. Accounting Activity records each accountant invited, added or removed.

Close the books

In Settings, choose the month under Financial year starts. The financial year starts on the 1st of that month. Changing it changes only how reports group the entries.

At the end of a financial year, click Closed through in Settings and choose the year's last day, or any other date that has passed. No entry can then be dated on or before it, including reversals, so reports for those periods do not change. Clear the date to reopen them.

Settings also shows the currency, the start date and who set up the books. View activity lists changes to the books and who made each one.

If the trial balance totals differ, Contact support.