QUICKBOOKS & BOOKKEEPING
CONTACT INFO
Kathryn C. Tiffany, LLC
Voorhees, New Jersey
Phone: 856-803-4651
Email:Kathryn@TiffanyAccounting.com
Web: http://www.TiffanyAccounting.com
Intuit QuickBooks Profile: http://proadvisor.intuit.com/quickbooks-help/kathryn-tiffany
Quickbooks Set-Up and Training
Industry-specific support
Accounting System set-up and maintenance
General ledger - charts of accounts, vendor set-up, journal entries
Billing
Inventory Management
Generally Accepted Accounting Principles (GAAP) standards
Accounts Payable
Accounts Receivable
Bank and Credit Card Reconciliations
Financial Statements Preparation
Financial Reporting/Analysis
Payroll Processing
Payroll Tax Payments
Federal and State Quarterly and Year-End Tax Reporting
New Hire Reporting
W-2 and 1099 Forms
Sales Tax Filings
Internal controls
Job costing
An array of services available from on-site/off-site training, part-time, full-time bookkeeping, consultation, dependent on the company's needs. We service areas all throughout the South Jersey area.
We're LOW COST, AFFORDABLE AND KNOWLEDGEABLE!
Kathryn C. Tiffany, LLC
Voorhees, New Jersey
Phone: 856-803-4651
Email:Kathryn@TiffanyAccounting.com
Web: http://www.TiffanyAccounting.com
Intuit QuickBooks Profile: http://proadvisor.intuit.com/quickbooks-help/kathryn-tiffany
Member of:
American Institute for Professional Bookkeepers
National Bookkeepers Association
Intuit QuickBooks program - Certified QuickBooks ProAdvisor
Association of Certified Fraud Examiners
Voorhees Business Association
Chamber of Commerce
Journal of Accountancy and Accounting Today
Most business owners know to keep their business assets separate from their personal assets. However, there are many small business owners that do not. This is a bad, bad, idea, both legally and logistically.
If you have paid the money to an attorney or to the government to set up a business entity, whether a L.L.C. or Corporation, the last thing most people want to deal with is administrative problems and difficulties like separating bank accounts and assets. However, this is a very important step to keep the limited liability of your company in tact. In law, there is a business concept called “corporate veil,” meaning the liability shield between the business owner and the business. When you commingle your business and personal funds, creditors can “pierce the corporate veil,” and get into your personal assets through liability through your business. This the the main reason to avoid commingling your funds, although there are also tax reasons.
Today, let’s discuss the legal reasons to not commingle your business and personal funds and the ways to avoid commingling.
How do you “commingle,” and what is “commingling?”
When you commingle your funds, you are treating your business funds as your personal money, whether buying or selling. Some of the most common ways to commingle are:
Transferring money between business and personal accounts without documentation.
Writing business checks for personal reasons/expenses, and vise versa.
Having only one bank account for personal and business needs.
Depositing business checks into your personal bank account.
Withdrawing money from your business account to pay personal expenses without documentation.
It is very important to keep your corporate veil intact. As discussed above, when you commingle, your corporate veil can be pierced. Essentially, all the work that you did when forming the L.L.C. or corporation, such as filling the Articles of Organization, paying attorney or filing fees, and perhaps drafting the Operating Agreement, will be for nothing as far as limiting liability. Creditors can reach your personal assets if you commingle, and there in lies the problem with commingling.
How to avoid commingling.
First of all, the impulse to put your business check into your personal check is understandable for a small business owner. After all, you want to pay yourself and buy more supplies for the business to grow more. However, there are several reasons why you need to deposit the check into the business bank account, and then pay yourself, and also buy business supplies out of the business account.
The first thing you should do is create a separate bank account if you have not already and document all expenses, withdrawals, and deposits. Documenting allows you to become a better bookkeeper for your business, and/or keep better records for taxes. Having better accounting by keeping separate bank accounts and only using business funds for business expenses can help you see how your business is performing, and seeing where you need improvement. It also allows you to keep your personal funds separate and helps create a personal budget since you will not be seeing business funds in your bank account.
Reducing Taxes.
One last benefit we will mention is the benefit to your taxes (and its easier for your CPA). One big benefit is that the IRS does not allow you to deduct business expenses that you cannot document. When you have one business account for personal and business expenses, it is hard to explain to the IRS what you need to deduct and for what purpose. The IRS is a lover of documentation, and by keeping track of your business income and expenses in its own business account is crucial to help minimize taxes and maximizing your deductions.
Many, if not most, small business owners pay more in taxes than they are required to because they do not have an organized system of keeping records and recording expenses. By simply creating a separate business account, and avoid commingling funds by using business money for personal expenses, you can create a more organized and efficient way to reduce liability and taxes.
If you need help organizing and/or creating your business, please contact the office of the Kathryn C. Tiffany, LLC and see if we can help you.
