Smart Money

If you're starting your own business or want to take greater control of your personal finances, you may have been tempted to subscribe to one of the many popular proprietary (and sometimes expensive) accounting products on the market such as Sage and Intuit QuickBooks. There is some sense in this: If you choose a less well-known product that is later discontinued, all your financial data could become unreadable overnight. Many of the freeware finance programs also don't support more advanced features like double-entry bookkeeping.

GnuCash offers a ready solution to both these dilemmas. As free and open source software, there's far less risk of support being discontinued altogether, and it can open and save transaction data in a number of formats. Despite being free of charge, the program is suitable for complex accounting data and supports double-entry bookkeeping, multiple currencies, and credit card transactions out of the box.

GnuCash 3.5 [1], which is the focus of this review, contains a truly staggering number of features. We have focused here on setting up accounts and inputting transaction data, but we encourage readers to take the time to explore the program's extra functions, too (see the "Other Features" section).

A Little Background

GnuCash was first developed in 1997. The first stable release was in 1998. It was initially designed to imitate some of the features found in Intuit QuickBooks but soon evolved and began to offer more. There are versions for Windows and macOS, as well as Linux (Figure 1). An Android version was released in 2015.

Figure 1: Download GnuCash from the application's main page.

GnuCash stores all data you enter in the flexible .xml format. It is also one of the few bookkeeping tools to support multiple currencies, and GnuCash developers claim it is the only open source program of its kind.

The software can track your finances any way you see fit. If you just want to balance your checkbook, GnuCash has that covered. You may want to do more in-depth bookkeeping, such as tracking credit card spending, assets, and liabilities. While GnuCash is perfect for personal use, it is a very powerful tool for business users. Users can also track investments and loan payments.

Installing GnuCash

GnuCash comes preinstalled in certain distributions of Linux. Failing this, there are several different ways to install GnuCash. Ubuntu users can navigate to Ubuntu Software, type in GnuCash, and click on the results (Figure 2). From here, press Install. Once the installation is complete, click Launch to open. The GnuCash website [1] also contains instructions for installing the program in other popular distributions.

Figure 2: You can use the Ubuntu Software Center to install GnuCash.

Each time you open the application, a pop-up box with a tip appears. If you don't want to see this, just uncheck the box underneath the message.

Setting Up Main Accounts

Once install is complete, you can set up your main GnuCash account. The software is suitable for both personal and business accounting.

It is best to set up five principle accounts. These include Assets, Expenses, Income, Liabilities, and Equities. Every transaction you make can be categorized under these headings. This makes your finances easier to manage.

You can simplify setup by using the GnuCash wizard. Although this is a fast way to get started, some users may find there are way more accounts and sub-accounts than needed. The sheer number of accounts can be overwhelming at first, but they can easily be unchecked and removed from your books.

To get started, open GnuCash. Click on File | New File From here, you can choose whether to use the wizard or enter your information manually. A pop-up box appears called New Account Setup Hierarchy. Click Forward to use the setup wizard.

Next, select the currency you wish to use in your accounts, and then press Forward. The next page relates to New Book Options, and there are four tabs to go through: Accounts, Budgeting, Business, and Counters. The setup wizard can walk you through all these.

However, more adventurous users can click Cancel when the setup window launches and enter information manually. Once you have cancelled, ensure that you can see Accounts on the left-hand side of the page. If you can't see this, go to View | New Accounts.

Next, click on Actions and scroll to New Account. From here, you can start entering your main accounts. We started with Assets as the first account typed, checking it was set to our currency of choice, US dollars (Figure 3). Next, under Account Type, we selected Assets. You can also choose to set a different color for each account, enter an account code, description, and any notes about this account.

Figure 3: GnuCash includes an account setup wizard. You can also enter your information manually.