Configuring QuickBooks for Royalty Software

If you want to configure QuickBooks for royalty software there is a free report on this topic at http://www.royaltysoftware.info/

This article covers setting up your chart of accounts, configuring products and configuring vendor records.

In the chart of accounts section they recommended tracking nomal accounts payable and royalties payable in two seperate accounts. This is the same practice that I have seen followed at larger publishers. Royalties payable are reported seperately on the monthly balance sheets so that management can see the extent of their royalty liabilities at a glance.

Example 1: Single Account

Accounts Payable.....$100,000

Example 2: Seperate Accounts

Accounts Payable.....$60,000
Royalties Payable.....$40,000

In addition, this report also recommend that you track unearned royalties (royalty statements with a credit balance) in a seperate asset account instead of lumping it in with your accounts payable (or royalties payable). In fact, this is is the correct practice if you want to follow GAAP, and its what outside CPA firms will tell you to do. Why? A unearned royalties are what authors owe you. Including this in payables would understate your actual payables.