The Wise “interest” account I have is a bit weird for bookkeeping. It is not a standard savings account, instead Wise invests in a fund which holds government bonds and the account “earns” as those bonds pay back over a period of time (I’m sure it’s more complicated than that).
Quickfile can subscribe to the feed from Wise but it doesn’t pick up the interest/earnings, instead I have a manual transaction which I update every month as I do my bookkeeping to reflect the current earnings to date of that account since opening. This is a little manual, but fine.
However, at year end I need to record the earnings during the reporting period and do manual entry (I do a transaction, I’m sure an accountant would do a journal). This then means that the monthly update I do needs to take into account the earnings during all previous reporting periods, and it will become a laborious manual process.
Any suggestions for automating this? Ideally, Wise would expose the earnings to date and Quickfile could pick them up and include them in the transaction feed, however assuming that won’t happen what other ways are there to automate this?
Then there’s also a gain/loss to record at the year/end, which is based on the return from disposals of parts of the bond fund made during that reporting period, i.e. each time I transfer money Wise sells some of the fund equal to the amount I transfer, which realises a gain which I then need to report in the accounts. Wise can produce a tax statement that states the gain/loss over a given period, which I presume I then need to record in the year-end journals somehow (in fact, my accountant will do this, I’m just providing the info as additional background as to why bookkeeping with this account is more complicated than I think it should be). I doubt this can be automated, as the tax statemenst from Wise aren’t automated, however all suggestions welcome.
I agree it’s weird - what I do is do an entry on round numbers - so for example book £100 when the interest gets over 100 and another at 200 - it’s not dead accurate but close enough for the purposes of managing the cash. At year end you cou;d do a final accurate entry and reverse it on day 1 of the new yeaer
Hi @pjh18,
Interesting, I’d not thought about being less bothered by the difference - I’ve always wanted the bank ledger in Quickfile to match what Wise shows!
But now, thinking about it more, maybe not tracking the interest at all is actually the correct way to do it? After all, the so-called “interest” isn’t “realised” until there’s a disposal, and the tax statement which Wise provides shows the overall interest, gains and losses over the period. At year-end, in Quickfile, if I include an entry to show the interest against “bank interest paid” it will actually show as a profit, but in fact this is not true, because that gain has not been realised through disposal of the bonds inside the Wise account, so I’m actually paying more (albeit not much) more CT than necessary.
Maybe the right thing to do is not to track the “interest” at all, but instead do at year-end do a journal of the gain/loss from the Wise tax statement? If that statement also shows interest then include that too. These amounts might actually bear no relation to what Wise shows as “interest” (which is also confusingly calls “returns” in the web interface and “earnings” on the transactions statement one can download".
If that’s right, then I just need to work out how to do the journal. Any ideas?
Well, my accountant has decided that it makes no odds to include the full “earnings” of the account as company income, which to me doesn’t make sense as that’s not realised gain. The tax statement actually shows a loss in GBP (as I had some funds in USD which had an exchange rate loss greater than the earnings) so it doesn’t seem right to account for the earnings but not the loss. the problem is, I can’t work out the right way to do it.
This must just work the same as other investments. They grow in value over time but isn’t that an asset? And then when they are sold the gain is realised and accounted for as income?
I know how not to account for the earnings which Wise show (which is the increase in value of the asset), I just don’t enter it.
But if I want to record this as appreciation in value of an asset what do I do? A journal to a code? Which code? Should I record it as a transaction on the account?
And then how to record the gains/losses when any part of the investment is disposed of? I presume this is another journal, but to which code?
And in both of the above cases, which other code? Since there needs to be a credit AND a debit.
