Ask The Quickbooks ProAdvisor: Mingling Money Between Personal And Business
As bookkeepers, we set up the accounting systems for many small businesses. One of the questions people ask (and always with a tone of confession) surrounds using business accounts for personal expenses. This post will address our most common sights, but as an Account Manager, I’m here to tell you… This is REALLY common, and you shouldn’t think we expect you to clean it up. We are here to help you organize yourself, and this is what we do.
If you are a sole proprietor… You can STOP WORRYING about this. As a sole proprietor entrepreneur, it is expected that you co-mingle funds. Your taxes are filed in a way (using a Schedule C) that assumes you have spent some of your money for business, but left some for personal. So, no problem. We can allocate your funds accordingly in either Quicken or Quickbooks (or any other accounting software you have chosen).
If you recently opened your business account, we can go through all the accounts and simply organize your expenses. The same is true if you have separate accounts that get co-mingled. We can use expense codes like “owner personal expenses” to help us separate the business expenses from personal.
If you are incorporated, but have some personal expenses buried in the business, we will take the time to evaluate any that seem unrelated to the business and simply allocate them to business owner personal expenses.
This process is quick and easy, yet seems to bring a lot of grief to our client entrepreneurs. This is my personal assurance to shed the grief, we know what to do.
About the Author Barb Fisher
Barb is the CEO of Fisher Bookkeeping, an outsourced bookkeeping consultancy that provides small businesses with a full-service financial department. Her favorite aspect of work is to break down the accounting to meaningful bits, so entrepreneurs can make a powerful difference in their own business. She's also a power lifter (squat: 215, DL: 270).