Handling a share portfolio

MYOB Staff Post SupportNoteGuy
31 Posts
MYOB Staff Post

Your MYOB software isn't specifically designed to track the buying and selling of shares, but it's flexible enough to be customised for this purpose. We'll step you through one method you can use to track shares using inventoty items.

 

This article is provided for guidance only - it might not be suitable for your business requirements. If you need clarification, check with your accounting advisor or post your question below.

 

Setting up your company file

 

The following things need to be set up in your company file:

  1. An Asset Account for shares: this can either be a single account or a header account with various detail accounts for different shares.
  2. An Income or Other Income account called Profit/Loss on Sales of XYZ where XYZ refers to the company issuing the shares in question.
    Note: If you are reporting PAYG Instalments on a Cash Basis, you will need to separate these by creating an income account for Profit on sale of shares and an expense account, other expense or cost of sale account for Loss on sale of shares.
  3. An Income account called Dividends to record the receipt of cash dividends. Again you can choose to have separate accounts for each company.
  4. A Customer and Supplier card both with the details of your stockbroker.
  5. An inventory item for shares. If you like, you can use the Stock Exchange Codes as the item numbers. We also recommend that you enter the date on which the shares were purchased to make reporting of items easier and include the date they were purchased. As shown in our example below, the item numbers used for MYOB Limited could be S-MYO-100700.
    Select the options I Buy This Item, I Sell This Item, I Inventory This Item. The linked Cost of Sales Account and linked Income Account for Tracking Sales should be the Income/Other Income account created in step 2 above. The linked Asset Account for Item Inventory should be the asset account you set up in step 1 above.
    Ignore any warnings you receive upon selecting the account.

Note: For users reporting PAYG Instalments on a Cash Basis, you will need to link an income account for 'Income Account for Tracking Sales' and an expense or Cost of Sales account for the 'Cost of Sales Account'.

 

 

Shares1.png

 

 

Recording shares already on hand

 

If you have already purchased shares and the value is only reflected in the Assets section of the ledger accounts but not in your Items List, you can use the Count Inventory window to update the list.

  1. Go to the Inventory command centre and click Count Inventory.
  2. Enter the quantity of shares you have for each item, and click Adjust Inventory.
  3. When the "Default Adjustment Account" message appears, select the share's asset account. If you have different asset accounts for each share, choose the asset account in the Item setup. You can then enter the purchase value of the shares.
    Note: This will only add the Shares to the Items list. It will not change any figures on your Balance Sheet.
  4. When you purchase additional shares, make sure you create a new item in the Inventory list. Use an Item Purchase bill, and select the appropriate Supplier card. The original cost and number of shares purchased will be maintained. When the shares are sold, the cost of the purchase needs to be ascertained for capital gains' tax purpose. Generally, brokerage is included in the cost base of the shares purchased.

 

Purchasing shares

 

Create a new Bill. On the first line of the bill, enter the brokerage fee amount. On the second line of the bill, enter the amount of shares you are buying and at what unit prices your are paying per share. See our example below.

Shares2.png


Note:
In the above example, we have bought 500 shares at the rate of $8 each with a brokerage fee of $24 incl GST. This is an example only. Please refer to your contract note for details of GST charged.

Enter the payment through Pay Bills and select your bank to pay this amount from.

 

 

Selling shares

 

 

  1. Create a contra account for Share Trading, used to offset sales and purchases from the same company.
    Note: A contra account is only required for individuals who are able to claim the GST input credit. For private individuals who are unable to claim the GST input credit, there is no need to create this account. When selling shares, the Sales shown on Steps 2 and 4 would be combined on the same Sale, but with the brokerage amount being a negative amount to reduce the amount being received. This money would be simply deposited straight tour your normal bank account.

    Image

  2. Create a Purchase for Brokerage. For correct reporting on the Business Activity Statement, brokerage needs to be recorded as a purchase. Disregard any messages about the account selected.

    Image

    Note:
    This is an example only. Please refer to your contract note for details of GST charged.

  3. Record payment of brokerage through the Share Trading contra account. This amount will be offset against the sale proceeds in Step 5.

    Image

  4. Use an item invoice to record the sale, selecting the appropriate customer and item number or parcel of shares you want to sell. Enter the number of shares sold and their value. When recorded, your accounting package will calculate the cost of sale on the original cost of the shares and produce an accounting profit or loss on sale.

    Note: Generally, brokerage is deducted from the proceeds of the shares sold.

    Image

  5. Record receipt of brokerage to the Share Trading contra account.

    Image

  6. Record Receipt of Net Balance from Stockbroker.

    Image

    Note:
    Please obtain the advice of your accountant or the Australian Taxation Office in relation to reporting of share sales on your Business Activity Statement (BAS).

  7. Enter cash dividends received, by crediting them to the appropriate income account in the Receive Money window. Our support note  shows different ways of treating dividends and dividend reinvestment plans.
  8. Report on the value of your shares. If you have set up a prefix for each item, you can easily report the value of the shares. In the Filter for the Items List (Summary) report, you can enter From: S-AAA To: S-ZZZ (where AAA and ZZZ are your first and last share items listed in the Items List) to view only your share items in the report. This report produces a useful listing of the number and value of investments on hand. Note: If you want to record the market value of the shares in your accounting software, you can enter them using the Set Item Prices button in the Inventory command centre. Simply override the existing Current Price with the new price. This figure will then appear in the Items List (Summary) report along with the original cost and quantities.

    Image

    This report shows the market price of the shares in the Current Price column, as well as the original cost in the Average Cost column. The Total Value and Grand Total in this report should match the Totals for the Asset Accounts set up to purchase the shares. Use the Analyse Sales (Item) report to display the income, cost of sale and profit for each company, as well as the number of shares sold (in the filter, enter S-* to show all items beginning with S- in the report).
12 Comments
Ultimate Partner Seattle
1,345 Posts
Ultimate Partner

Adrian,

 

Thank you for your post.

I have some ideas, comments and procedures that I have listed below.

 

For tax and accounting purposes for shares, it is necessary to decide whether one is a Trader or Non-Trader.

 

The accounting that I record for my clients is that of a Non - Trader and this is the basis for my comments.

 

A Non -Trader will setup the Share Portfolio as a Non-Current Asset with headers such as ASX Listed Shares, Overseas Shares, Shares in Non-Listed Companies and Shares in Associated Companies.

I will limit my discussion to ASX Listed Shares.

 

On purchase, the Stockbroker will issue a Buy Contract Note.

I would set up a ledger called 1-2010 ANZ Banking Group Limited 200u     200u being the number of shares held.

I would setup up a Card called ANZ Banking Group Limited - Purchase

I would use Spend Money to record the purchase of the shares.

Chq # would be name of the Stockbroker eg ETrade.

Date would be the date of the Contract Note being the Transaction date on the Contract Note. 

Amount is Total Amount $ on Contract Note.

None of my clients are able to claim the GST on the Brokerage so I do not need to use a separate line for the Brokerage.

 

On sale, the Stockbroker will issue a Sell Contract Note.

Lets say the above 200 ANZ shares are sold.

I would setup up a Card called ANZ Banking Group Limited - Sale  

I would use Receive Money to record the sale of the shares.

 

The Buy Contract Note and Sell Contract Note are stapled and the difference between the Sale Price and the Purchase Price calculated. This is the Capital Gain/Loss on these shares.

There may be additional shares in the 1-2010 ledger if a Dividend Reinvestment Plan had been utilised.

The Capital Gain/Loss is calculated on any Dividend Reinvestment shares.

 

Under Other Income, I setup up a Header called Capital Gains/Losses.

I setup 3 accounts being Capital Gains <12 months, Capital Gains > 12 months and Capital Losses.

 

A journal is used to record the Capital Gain /Losses.

The amount in the 1-2010 ledger should be nil.

The 200u is changed to sold March 2016.

 

I mark to market by using a ledger called Inc/Dec ASX Shares FY16.

I keep a separate Mark to Market Ledger for the past 4 years.

The Share Portfolio lIsting provided by the Stockbroker agrees with the Header total of ASX Listed Shares.

 

Internet Access to the Stockbroker and the Share Registry should be arranged.

 

On purchase of shares, the Company's Share Registry on behalf of the Company will write asking for TFN (if not held by the Share Register), Bank Account Detail as few listed companies issue dividend cheques,

Dividend Reinvestment Plan details if offered by the company etc. 

 

Chess Holding Statements are issued on a monthly basis (if Chess sponsored by your Stockbroker)..

The details on the Chess Holding Statements should be agreed to MYOB.

 

Contract Notes and Holding Statements should be keep for five years after disposal of shares

 

Duncan Smith

Business Advice + Tax

Community Manager Suja_P
5,363 Posts
Community Manager

Hi Duncan (@Seattle),

 

Thank you very much for taking the time to share your thoughts and providing details of how you handle a share portfolio in MYOB software.

 

Regards,
Suja

 

 

Ultimate Partner Julie_A_C
3,020 Posts
Ultimate Partner

As Duncan has stated, the situation needs to be assessed as to whether someone is a share holder or a share trader.

 

This will also impact on the coding of the sale and purchase coding of the entry, as if you are an actual share trader, these purchases and sales should be coded GST Free and included on a BAS, not coded as N-T (not reportable).

 

Whether you can claim the GST back then gets back to the fact that they are financial supplies and there is a financial threshold limit, on when GST can and can not be claimed back. 

 

Very tricky subject to be discussing.

Community Manager Suja_P
5,363 Posts
Community Manager

Thank you for your comments, Julie (@Julie_A_C).

 

I encourage community members to use the above article and its comments as a guide. Should you have any specific queries, please post your question here, and seek advice from your accountant.

 

Cheers,

Suja

 

Experienced User John_P
43 Posts
Experienced User

Is there any chance that MYOB Account Right can be updated to handle Shares distribution of Return of Capital.

 

Some clients receive a Return of Capital to go towards previous Share parcel purchases. Lots of Banks and other major Shares purchased will distribute a Return on Capital. Some clients end up buying up to 30 parcels of shares over period of time. When the Return of Capital is later to be spread across the parcel purchases, this has done as ratio of each parcel held. A single payment received from Shares would then have to be manually calculated to be distributed across the entire parcel purchases.

 

There's a lot of time spent handling these types of transactions.

 

Thanks,

 

John P

MYOB Moderator Steven_M
19,819 Posts
MYOB Moderator

Hi @John_P


Thanks for the feedback in regards to AccountRight. 

I see you have posted your particular feedback as an idea on the AccountRight Idea Exchange - Return of Capital Share distribution. I would encourage other users that do come across this post and would like to see that particular idea added to vote and comment if required for its possible inclusion in future releases of the software. To vote for an idea on the AccountRight Idea Exchange select the + VOTE button to the left of the idea's name.

Experienced User HAL9000
17 Posts
Experienced User

 Hi @SupportNoteGuy

Thanks for these notes. I'm just setting this up and so far have 2 questions:

 

1) In your screenshot under Purchasing Shares, the first line item (for brokerage fee) doesn't make sense to me. The quantity you have enetered is zero, and the price is zero, yet the total is $24. Shouldn't the total be zero in this case?

 

2) After I have entered my share purchase and I return to my items list, I see that the number of items on hand is one more than the actual number of shares purchased. This is because the brokerage fee is also counted as an item. Is this intentional, or have I misinterpreted something?

 

Thank you in advance,

Ralph

MYOB Moderator Steven_M
19,819 Posts
MYOB Moderator

Hi @HAL9000

 

Having the first line on the Enter Purchases window set to a Bill value of 0 and a Price of 0.00 but a Total* with the amount of the brokerage fee doesn't impact the item's quantity and value. 

*The brokerage fee would need to be entered manually into the Amount column as AccountRight will calculate it manually (quantity of 0 x Price of 0 = 0).

Experienced User HAL9000
17 Posts
Experienced User

Thanks @Steven_M and @SupportNoteGuy - that answers both queries. Following the example of the screenshot, AccountRight had been calculating the brokerage, resulting in a total of zero; so assuming the screenshot must be erroneous, I'd entered it with a quantity of 1 instead of zero. This ensured that the total amount was correct (eg. $24, to stick with the example in the screenshot) but increased the inventory by one in the process! I didn't realise you could just enter a total and leave the preceding values without a value.

Ultimate Partner Seattle
1,345 Posts
Ultimate Partner

@HAL9000 @SupportNoteGuy @Steven_M

 

Hal,

 

In over 15 years of using MYOB for share portfolios, I have never used Purchases or items.

 

My preference is to use Spend Money and Receive Money.

The Portfolios that I handle have less than 20 Investments so each Investment is listed separately on the Balance Sheet.

 

Some Accountants might prepare a Balance Sheet with a total of ASX Listed Shares.

If that was the case, then a list outside MYOB would be kept.

This list is provided continually by the Broker during trading hours.

I print out the portfolio from the Broker website say quarterly and agree the Market Value to MYOB.

 

Duncan

Experienced User HAL9000
17 Posts
Experienced User

Thanks @Seattle I think that is actually the way I do it in my personal MYOB account...? I just have a "Share Purchases" Other Expense account, a "Share Sales" Other Income account, and a "Share Dividends" Income account. Is that what you mean?

 

I have no way of listing each equity separately that way, but I wasn't really concerned about that for the personal account.

 

For the business account though, I thought it might be better to have each equity listed, as in the tutorial, and it's also neat that the Inventory shows the amount of shares held for each equity which I'm not sure would be the case with your method?

 

 EDIT: I've just re-read your comment above from March, which I think explains what you meant, and is much more involved than the simple method I use for my personal account.

 

Also, yes the accountant has direct information from the broker, so setting up the MYOB account in this way is mainly for my own benefit.

Experienced User HAL9000
17 Posts
Experienced User

Now that tax time is here, I have a further question about this method that I've been using, as described in the tutoral.

 

Looking at my P&L report via Reports... Accounts... Small Business Entity... Proft & Loss [Cash] - it's indicating at the end of the report:

Other Expenses

   Loss on share sales  (and gives a $ figure exactly equal to what I've spent on shares, matching the figure in my Shares Asset account.)

 

But I've not sold any shares, I've only bought them. So I'm confused as to why it's reporting my purchases as a Loss, which in turn affects my bottom line Net Profit.

 

Moreover, when I drill down into my Loss on share sales account (which I've placed under Other Expenses) there are no transactions appearing there at all, as expected.

 

Is this what I should expect from the P&L figure, or does it look like I've done something wrong?