Australia How to Account for Your Time?


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How do you account for your time in a business if there is no money flowing in or out you're just working towards a product that you eventually want to sell?
 
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Werner Reisacher

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I assume that you are self-employed and create products that you are selling. If this is correct, your overriding concern is how much money you absolutely need to make a living. To achieve this fixed target, you have three variable components - the # of hours you are working, the # of units you are able to sell, and the $ price per unit you are selling your products at in a given period. (week, month,..)
In order to achieve your target, you must be able to sell the assumed # of units at the assumed $ price. Otherwise, you have to work longer hours if that is possible or increase the sales price per unit. If your calculation shows that the unit price you plan to sell at is below the market, you can sell at a higher price and work fewer hours or continue to sell at a lower price to increase your sales and increase your standard of living (your target) Being self-employed, your hourly rate is a function of all the other components.
If you are creating a few products that require more time and/or are sold at different prices, break your daily hourly time record down by type of product. The total income must still match your targeted Income.
If you are doing this activity as a part-time business, divide the income the products generated by the number of hours you worked. Whatever that number is, you have to decide whether the part-time business is worth your time or whether the time could have been either used for more profitable activities or spent on some hobby projects, if you can afford it.
 
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Werner, sounds like we're on a different page. I'm trying to figure out what journal entries you can make to account for your time? Since there is no money getting exchanged in the form of equity for example, how do you record this time into an accounting system?
 

Werner Reisacher

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There are all types of record-keeping systems. Accounting is a way to keep track of financial information. There are dozens of time recording software out there. Project management systems keep track of the time worked on projects and software used by Dr. and Dentists to schedule their appointments and drive their billing systems are other means to keep track of time. They are not accounting systems but are usually providing information that is generating invoices and other input into the accounting systems.
 
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kirby

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Hi Zirconium

To provide you with a direct answer to your question for the situation described in your first post-

The answer is : You do not make an accounting entry to record your time, unless you had invoiced your own business and been paid. But for just pure time spent on your own business - no accounting entry.
 
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