Topic: Dangers of combining company and personal funds in the same account - page 3. (Read 607 times)

You will need a very good accountant who knows how to get inventive, if you do this. Without one you have a big chance of getting in serious trouble with the IRS. I don’t think it’s worth it to be looking over your shoulder all the time. Peace of mind is priceless, record & pay your taxes properly, it’s the smart thing to do.

In the case where it is a personal business, there is also danger mixing up money for business and your personal money because you will easily be able to tamper with the money meant for business in tough situations. Another danger of receiving money meant for business in personal account is that it makes your business look unserious. Imagine sending a personal account with your name to a new client who have just been referred to you for a job. It is not a good image for your business. Every company must have a company account, so the owners are able to differentiate company funds from personal funds.

Nowdays on which technology and security features then it would really be that so hard to believe that there's really that kind of breach or unauthorize withdrawal of funds if ever a business does have that kind of corporation kind of system or simply that there are a couple of individuals who do own such business.It is really just that normal that whenever that there's funds to be that outgoing then it would really be that impossible that it would really be that allowed or would be approved without others permissions and since to the easy access that we do have today then those things wont really be that so hard to be detected or totally be on point on the time that there's things happening around. This is why it would really be that some sort of mind boggling on how things to be on work specially nowadays that it is really that easy to pass up information
and also with having that common sense then business agreements and terms shouldnt really be that allowing those kind of casual withdraws or outgoing transactions without being noticed or being fully allowed.

However, there are slim exceptions whereby the organization are not much financially stable and funds are not readily available to go through the process of company registration and they startup their activities with the motive of doing the needful later as they grow in finance.

Finally, Keep the pressure for account rectification on and ensure funds are out of your control as soon as it's done to relieve yourself from the temptations that are associated with being in custody of association funds. I advise you to update your personal records immediately there is a transaction whether debit or credit as you may forget the details sooner or later and put yourself under unnecessary stress.

In the case where it is a personal business, there is also danger mixing up money for business and your personal money because you will easily be able to tamper with the money meant for business in tough situations. Another danger of receiving money meant for business in personal account is that it makes your business look unserious. Imagine sending a personal account with your name to a new client who have just been referred to you for a job. It is not a good image for your business. Every company must have a company account, so the owners are able to differentiate company funds from personal funds.

The issue of holding organization funds by an individual, lets say the treasurer of the organization should be heavily discouraged as most times it does not end well and leads to the funds being utilized or stolen by the person in charge. organizations should plan their startup properly and that includes being properly registered with the government which enables them to open a company account with approved banks.

Right. Separating you accounts is a necessity and not something that you should just consider and then disregard.
Keeping your business finances and personal finances apart isn't just about organization, it is also about legal stuff. If your business and personal expenses mix and mingle, it can get super confusing during tax season. Also, when you register your business, it becomes a separate legal entity. Having a dedicated business account makes this separation and in case of any legal issues, your personal assets cannot easily be affected. You will also be able to monitor how your business is performing, if your accounts are mixed, youll get confused if some of those expenses relates to your buiness or just for your personal leisure.
Imagine when your business ever faces an audit, having separate accounts makes the process much smoother. It will make you life easier too.

everyone is vulnerable to the temptation of taking money that doesn't belong to them, this is the reason why every association - organization - community must have its own financial account and not mix it up with the personal financial account of the chairman - treasurer or anyone who has high influence in the association. I am currently joining a church association, our association is very open with the members and every money that goes out and comes in is announced to the public so that nothing is hidden and kept transparent.

The issue of holding organization funds by an individual, lets say the treasurer of the organization should be heavily discouraged as most times it does not end well and leads to the funds being utilized or stolen by the person in charge. organizations should plan their startup properly and that includes being properly registered with the government which enables them to open a company account with approved banks.
However, there are slim exceptions whereby the organization are not much financially stable and funds are not readily available to go through the process of company registration and they startup their activities with the motive of doing the needful later as they grow in finance. this now leads to the organization funds being held by trusted members for the time being. Another one and the one that prompted me to start this topic gave me a really big challenge and I learnt invaluable lessons from it. It is the issue of holding association funds temporarily pending the rectification of accounts and change of signatories with past leaders whom have relocated from the state.

This is a very risky and complicated matter, and it is even more complicated when you combine the association funds with your own personal funds in the same account. The risk of overspending may arise as you will constantly see enough funds in your account and might tend to forget that there are foreign funds present and before you realize what you've done, you're already indebted to the company.
Secondly, there is this sense of caution that arise instinctively when your personal funds is diminishing whereby you restrict yourself to having only things you really need and curb all excesses until you are back to having much funds. In the case of combined funds, that discipline might not be observed as you see encouraging figures always.
Thirdly, You might intentionally spend the alien funds with the thought of replacing it whenever you own funds are available. This is a very big mistake without proper accounting and documentation to checkmate what you spend because before you know it, you've utilized more than your assumed funds can handle and leave yourself in a great mess.

A good solution to this is to have an entirely different account to receive funds that is not yours and refuse to have ATM card or much access to that account. In fact, the account should be as good as forgotten by you and the only connection to it is withdrawing funds for the organization purpose, Receiving credit and debit alerts to be able to monitor the activities of the account. You also need to have a place that you detail the transactions on that account, like your private record so that you can have the account record ready at any time it is requested by the organization. this rapid accounting relieves you the stress and time wastage of explaining yourself too much as everything related to the transactions on the account is properly penned down and possibly snapped and backed up in your google drive for retrieval in case you misplace the books.
This way, you will have two advantages

• Reduced Interaction with with funds that are not yours as there is a separation of concerns and you get to plan yourself properly with your funds
• You gain respect by being accountable for the funds anytime as you have the transactions carefully spelt out in your accounting books and a backup online if books are far fetched

Finally, Keep the pressure for account rectification on and ensure funds are out of your control as soon as it's done to relieve yourself from the temptations that are associated with being in custody of association funds. I advise you to update your personal records immediately there is a transaction whether debit or credit as you may forget the details sooner or later and put yourself under unnecessary stress.

Note: At the time of developing this topic, Discussing it with a friend, I learnt of a woman leader whom squandered millions under her care for the purchase of association luxurious buses and started shedding tears when asked to return the funds within one week. All these could have been avoided If the organization had its account or if she had known these principles above.

To be honest, I don’t understand the problem at all? Perhaps in your country business is conducted differently, but here, the company has a current account that is assigned to a business entity. There are several keys for electronic digital signatures, for different levels of confirmation, which complicates corrupt and illegal actions with the funds of a law firm. Moreover, many companies maintain additional control over payments, as do banks with accounts of legal entities. And they can, if suspicious payments are detected, pause the transfer of funds and contact the account owner for an explanation.
The issue of “frozen” funds is resolved in the same way at the request of business owners, in situations like the one you described. But I have never heard of anyone “withdrawing money, putting it in a suitcase and taking it to a friend for safekeeping.” These are unjustified risks

Or do you mean some other situation?

The issue of holding organization funds by an individual, lets say the treasurer of the organization should be heavily discouraged as most times it does not end well and leads to the funds being utilized or stolen by the person in charge. organizations should plan their startup properly and that includes being properly registered with the government which enables them to open a company account with approved banks.
However, there are slim exceptions whereby the organization are not much financially stable and funds are not readily available to go through the process of company registration and they startup their activities with the motive of doing the needful later as they grow in finance. this now leads to the organization funds being held by trusted members for the time being. Another one and the one that prompted me to start this topic gave me a really big challenge and I learnt invaluable lessons from it. It is the issue of holding association funds temporarily pending the rectification of accounts and change of signatories with past leaders whom have relocated from the state.
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It's a good idea to keep them separate because a business or company bank account allows you to manage your company's finances professionally and wisely and you will also know your expenses and income related to the business or company you run. So it's best to separate personal and company or business financial accounts to avoid chaos, because this will definitely bring chaos.
Having a separate bank account will enable you to manage your business finances very well and clearly record expenses and income, no matter how small, in the company or business account that you manage.