Full question:
If I comingle funds in one account for two businesses and proceed to conduct transactions for both, how can I properly account for each individual business transaction to meet legal and accounting principles?
- Category: Records
- Date:
- State: California
Answer:
The obvious question is why are you only using one account for two businesses. Talk to your bank's representative, and you can easily set up another account in order to properly divide the funds between the two businesses and keep them separate. Otherwise, you are faced with trying to maintain two ledgers of credits and debits - one ledger for each company - while having the money pooled in the one account. This is just a really hard way to try to do things, and makes mistakes and problems much more likely. The fact is you are automatically violating basic accounting principles by using one account for two businesses. It is not necessarily "against the law," but it may cause you trouble at tax time, and errors on your taxes could result in legal trouble from the IRS. Get another account and divide the money properly.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
