Handling a share portfolio

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'.

 

 

 

 

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.

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.
   
   
   
   
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.
   
   
   
   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.
   
   
   
   
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.
   
   
   
   
5. Record receipt of brokerage to the Share Trading contra account.
   
   
   
   
6. Record Receipt of Net Balance from Stockbroker.
   
   
   
   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.
   
   
   
   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).