Topic: Dangers of combining company and personal funds in the same account - page 2. (Read 668 times)

this topic needs comprehensive discussion regarding the law involved but I think the fact that company considered different entity, so long there's clear distinction between what the company owns and what it doesn't own does it means there will be no problem?
but I still agree that company should just have their own bank account, why even bother starting out a company which supposed to be a different entity altogether if the money still combined with personal money just doesn't make sense to me to go through many legal processes and would still combine funds, the main reason people starting out company because they want distinction I guess.
therefore anyone who would think of starting company would instantly have it in mind to differentiate between company assets and their own assets, basically creating bank account for the company since day 1.

Even if it's not mandatory, it's unprofessional to use a personal account to manage business finances and no matter how small a business is, it should have its finances separate from the personal finances because it will make things go wrong since expenses might get mixed if a single account is being used for keeping both business and personal money, and even if it's not an account and its just cash, since most small businesses deal only in cash, it shouldn't be kept together with personal money as things will get out of hand this way.

That's why, one should take a professional approach regardless of the scale of their business and use separate accounts for personal and business finances to keep things clear and precise without having to forget how much the business has earned and how much has been spent and how much is the revenue or loss, etc.

The business should be seen as a separate entity that should live an independent life from the owner. In the face of the law, a registered business is a person that can sue and be sued. Until business owners understand this concept, their businesses will keep failing. The first thing a business owner should know is record-keeping and many businesses don't care about that because the business is not seen as a person.

Some business owners claim that their inability to read and write has limited them from keeping records and they don't have the money to hire an accountant. I usually tell them that illiteracy is not an excuse because they can still separate businesses for personal dealing. They should simply pay themselves wages or salary and never spend more than their earnings.

I am not an expert on the law but having independent accounts is mandatory and it is not really optional, we must remember that a company is treated as its own entity on the eyes of the law, however if the owner of the company uses the money that is supposed to belong to it in a way that clearly indicates there is no such independence then the company can be treated as if it did not exist.

And this is terrible because if the company was sued not only its assets will be at risk, but the assets of its owner will be up for grabs as well if they lost that lawsuit.

This is obvious and I doubt that any company would do something like this ever. I mean there isn't even a small company that would do this, or at least should. I think everyone should be smart enough to have a company account somewhere and just deal with them. The bigger ones do not even have an "account", they have an account with the firm they deal with and buy through them and just ask them to make the moves, they do not just login an exchange and make the moves, they tell them, and make the moves that way.

It is important to know that OTC is still a big deal when it comes to bigger numbers and that's how it works. I know smaller companies that invest just thousands, few thousands that's it, and even they don't do this.

This is why people should take The entity concept more seriously. The business is a different entity from the owners(s) so it doesn't make sense for a person to have the funds of a business in his personal account.
Even if it's a small business where only one person is involved, it would not be wise to use one account as your business and personal account.

You shouldn't start doing business when you have not registered your business with the appropriate authorities. 
There are structures to make sure just one person doesn't have all the access to the company funds even if you're the owner of the company.

Combining your company and personal funds in the same account is one of the most common problems of a start up entrepreneurs, this is what we called commingling funds. It can be a serious problem and it leads you to a personal liability for your business debts if this can't prevent as early as now. It's best to maintain a separate bank accounts for your personal and business transactions as well as to keep you books diligently, that's why it is essential to have your company accountant/bookkeeper.

It is very danger  I mean who the hell is combining company and personal funds in the same account.
I has couple of bank account with different purposes there is for saving there are for daily transaction and many more.

The danger would be real if you can't track all the debit or credit for personal use or company use. The accountant should pay double for this hahahah

I formed an LLC I have 1 partner. We have

a separate bank account
 a separate amazon account
a separate credit card

and we file the LLC form as 50-50 partners splitting the income.

It is a lot of paperwork for a small business but it is the right way to do it.

Every business financial management must be separated from personal accounts, there is no reason to mix business funds because it is now very easy to create accounts online for business needs, we must implement good management for business development, especially with regard to financial management.

If we have a small business, we can still consider using funds in one bank account even though it is not recommended, but large businesses are obliged to manage finances specifically for business purposes and even need a financial advisor to manage finances for the business.

Mate, even though it is personal business we are having, we must not mix up funds anyhow we want, business fund is different from funds stipulated for our daily expenses and use, if we try mix them up then we may end up not being accountable to how the business funds is being utilized and along the way it may die because of too much spendings on it, it doesn't even look being professional enough when funds are mixed up.

I have what I consider to be two important rules:
1. Always negotiate, sign commitments, even if you are doing business with your father, brother, best friend. Signed commitments introduce more discipline in the relationship between business partners and interrupts all conversations when problems arise and excuses like "well, we are friends/relatives" start.
2. Doing non-core work yourself, only if outsourcing is really costly (money, time), provided you can do it yourself. In all other cases - give the work to others ! They will get money, they will buy and consume, and it is not excluded that you, too. The economy works qualitatively only when everyone gets and spends money. Otherwise, the economy collapses. I can do accounting. But I'm not interested in it, and I don't like it. I am ready to pay a hired accountant who keeps several companies - it is inexpensive for me, but it earns a person who probably has a family and will spend this money, which will directly or indirectly come back to me.

Except for weekends - we do not cook breakfast - we go to any of the 5 cafes near our place pr, small, cozy with different cuisine, where our "neighbors" work, we get delicious and varied food, we do not spend time on cooking, we get pleasure. Yes it is a bit more expensive than if we do it ourselves. But in this way I support these private small businesses - for me it is an acceptable cost, plus I get what I want, and at the same time I save time and effort....

Everything should be kept in a separate savings book. Because if not, even if we initially did not intend to use company funds, they could still potentially be used intentionally or unintentionally. And it will make the calculations more complicated. So separating in two different bank accounts would be better. And it will also make it easier to record and calculate. The inflow and outflow are also clearly visible. the accounting process becomes easier. But nowadays people seem to be smart about finances so everyone must take wise steps in finances.

Indeed, there will be a problem if you only use an account to store company funds and also personal funds. By having careful records and being disciplined, you will not be able to misappropriate funds, but in my opinion this will make the account owner have additional work because he has to separate the funds he owns from the company funds. Yes, it would be better for those who cannot manage their own finances not to be given the position of treasurer because they will definitely use the company money they hold without anyone knowing and this will be very detrimental to the company.

Totally could really be applied with those larger companies on having this kind of set-up where when it comes on making withdrawals then it would really be needing that kind of confirmation with other members or owners specially on a main business account if ever there would really be that withdrawals to be made. It is really just a matter of setting things up well and its true that with the possibilities that could really be applied then security mechanisms or control would really be there.So therefore it wouldn't really be that hard to follow this kind of system on which there's no way that other members or co-owners would really be making some transactions without others been knowing. Having that your own accountant does really give out that comfort an less hassling yourself on making transactions or paperworks but you would really be needing to pay up to someone which its normal but the convenience that it gives then it is really that worth.

Maybe it was also the owner of the company? But I get you. It's indeed more professional to just use the company name than to a personal name. If you are not comfortable with what you see, maybe it's a good idea to question them?

Or you can decide to abandon them before your instincts come to reality and problems are going to be experienced later on. Combining a company fund from a personal fund is just plain bad. Dunno who the fck came up with that idea? Damn. I think it's too shady and there is a clear intention that the person is going to ran away with the company's funds. Good thing there are early signs of knowing this.

For large companies that have tax obligations, perhaps this will not happen. Both companies and individuals will be required to make valid reports about their finances. Moreover, apart from tax matters, is there a businessman who does this stupid thing where the company will also know the economic health of its owner?

There's nothing wrong with it if you own the company, but it's much better to create another account for the company's fund to track it's earning daily, weekly, or event monthly so you can monitor it if there's something wrong with the funds, etc.
There's no valid reason why someone would combine the company's fund to their personal funds since it would just mess everything's up.

I believe that many people have already suggested the idea of maintaining separate accounts and wallets, differentiating personal ownership from business or company assets. In my view, when all financial records are meticulously kept in a journal, and one possesses a strong sense of discipline, it is sufficient to ensure a clear demarcation of the funds allocated to the company and those held in one's personal wallet.

For those with a risky mindset, such as a tendency to use funds held but not owned, it is advisable to avoid taking on the role of treasurer. Organizations or companies certainly do not desire outstanding debts, as they disrupt all pre-established timelines. Any form of financial indebtedness between individuals and the company often culminates in unfavorable outcomes. This is merely a cautionary note for those who struggle with financial discipline in managing company funds.

It is not legal if the business has more people than 1 .

Ie if you are running a small schedule c  with sales and buys on ebay. mixing is not a huge issue since it is you and you alone but. you better keep records of every buy and sale you make when you do the schedule c on your tax return.

Once you expand the business you need separate books and you need a business bank account with only business buys and sells. If you dont do it that way you are headed for trouble.