Topic: Dangers of combining company and personal funds in the same account - page 4. (Read 680 times)

And that's it. I don't know why the OP makes life so complicated. He does what shouldn't be done and then writes walls of text about it. Don't mix your personal accounts with those of the business. Full stop. This happens in self-employed people or small businesses, because obviously in a big company with an accounting department it doesn't happen at all.

OP, you know what you have to do. Don't give it any more thought.

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.

It’s only natural to keep separate accounts for your business, no matter how small it is and your personal use. As a business owner, having your funds meant for business in the same account as your personal account is an invitation for disaster sooner or later.

At the very least, a business should keep a separate account so you’ll have clear records involving your debit and credit transactions and also precise information about how good or poorly your business is faring.
A business owner managing an account for business and personal use could likely use funds meant for business purpose for personal use.

its common sense that usually known by most of people day 1 they started a company, its never good to just combine your personal funds with company's money because more likely when the company need money or in the brink of bankruptcy your money will also get involved which supposed to be your emergency fund now become company's emergency fund.
there's reason why people start company because they want their business to be independent from the perspective of law and finance, you create bank account specifically for the company, not for you.
therefore combining personal fund and company fund just gonna seemed silly honestly.

Since OP write 'Company' specifically and not 'Business' then I suppose what he means is at least a Company where there are a proper work division that has enough employee to handle each division. So, I guess it's pretty common knowledge for an owner of a Company at that scale to separate the fund. I don't think a business owners who are still combining Business and Personal fund would reach a 'Company Scale' level, they will either stuck in the small scale business level or they will goes out of business, or they finally realize their mistake and start to separate the funds, after that they might scale up.

I think it's common knowledge to not mix your funds with your company's regardless if you're a board member, a treasurer, or even the founder of the whole enterprise. That counts for embezzlement right? So it's a criminal offense subject to the long-arm of the law. Would you really risk that? Besides, it's not as if this will save you from paying taxes either, one way or another you'll have to pay for them and this is especially true for founders who have separate tax profiles with their businesses.

Just stick to what's legal man especially if you're just a startup making a name for yourself. The last thing you would want right now is a hamper to your success and criminal liability will do just that if you're not careful and law-abiding.

It is a standard thing to separate a personal account and the company account.  Separating them can effectively track both the inflows and outflows of money, joining them will make it complex to identify the flow of money. So it affect the auditing of the finances.  This will also affect the funds of the company in case the person is prone to spending spree, since the funds is not separate, a person might spend the money of the company for his personal use.

Aside from that, this articles may help us understand why we need to separate our personal funds from company fund.
Why Mixing Business and Personal Finances is a Bad Idea
Why Avoid the Danger of Mixing Business & Personal Money

According to the article combining company and personal funds in the same account prevent us to:

• Improve your ability to make well-informed business decisions
• Present legitimate financial data to lenders, partners, and other interested parties
• Keep accurate books so it’s easier to prepare a business tax return

This discussion is quite useful, especially for someone who has just started a business, especially if the business being built is an independent business, not a collaboration involving many people.
In building an independent business due to limited costs and human resources, we as pioneers sometimes have to be both a conceptor and an actor, where we are required to be able to do everything, be it planning, implementation, management and even marketing. And so that our business can develop, we must be as wise as possible and as careful as possible in doing everything, especially in managing finances because this is the determining factor. And if our business has started to develop then never hesitate to recruit employees, especially employees who are quite capable of managing the company's finances and don't ever think that recruiting someone who understands financial management will only increase the burden of expenses because there is a certain amount of money that you have to pay. pay every month. In fact, this will have the opposite impact, when you hand something over to an expert, your company's finances will be managed better because your company's income and expenses will be clearer and this will of course help you to minimize risks and losses. Because good financial governance really determines whether a business or company will progress or not.

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.

This is not new and it's not peculiar to only organizations that have no company account. It depends on the character of the person who's in charge of overseeing the account. We have seen cases of people squandering money from the association's account both the single signatory and multi signatory account. If the people managing the treasury account are not sincere, such disaster are bound to happen. My friend is the one managing their association account using his personal account but has never been query before for misappropriation of funds or any suspicious transaction. During my days in school, my association was operating a multi signatory account and the president, treasurer and financial secretary conspired and falsify the patron signature to withdraw the association funds and squander it recklessly. It has nothing to do with method using in saving the money but has everything to do with the individual behind the management of funds.

that is very correct! if you don't want to go crazy later on, better separate those funds, it will also make your life easier. there's no price of having such peace of mind on this matter. you will thank yourself even if you do that diligently.
it is no difficult to create separate accounts. so why not go thru such easy path rather than a headache later on?

Anyone who combines business money with his own money is a person who does not understand anything in the ABCs of business. The company or business is a completely independent entity from the self-unit. Frankly, I am surprised that this topic was brought up because I do not imagine that there is still anyone who combines them, especially since we are now living in a globalized reality in which everything is organized and subject to clear legal controls. Any person who launches a company in any financial system will have to create a special account for the company, usually called a “business account,” and all the company’s financial transactions are carried out on it.

Anyone who combines their company funds and personal fund in the same account is a novice business person. Any experienced business person would know that this is like swimming with the sharks. You are going to get bitten. You'll end up using company funds for the unending plethora of personal and family problems and running bankrupt.

At least the business person should get someone to do their finances for them. If they do not employ any other person in the organization.

There are some business people who behave carelessly by only relying on their instincts to advance their business and manage their finances. And behavior like this is often carried out by those who are just entering the world of "beginner" business.

Actually, the reason why we have to separate personal finances and business finances is quite simple, namely to separate finances and personal needs, so that with this the money used as initial capital will not be disturbed by issues of personal needs. "Because it often happens, especially to micro and small entrepreneurs, that even though they run out of merchandise today, the next day they are confused about finding capital to trade again, because the money they previously got was used up to buy personal needs."

if you are self employed where your "business" is a hobby(low income/not registered), then i see lots of people co-mingling their "business" with their normal life.
however if you have an actual business that is tax registered.. or/and has employees. then you should have separate accounts

if a company is set up to need a treasury. but that treasury is putting funds into his personal account. he is not a treasurer. he is a criminal yet to be caught..

no company that has enough business structure to have/need a treasury, would hire a treasurer that uses their personal account for business uses.
the company should have a company account registered to the business with the treasurer authorised to access the account. whereby if the treasurer retires, resigns or is sacked its a simple name change by the company of authorised persons to the account. instead of asking ex-treasurer(or their family) to close that ex-treasurers personal account and send funds to company

You started a good topic; it really needs discussion. Even these things are taught by many mentors, if you have any in the field of organizations. I mean, those who are planning to be in charge of the funds of some organisation, or if you want to vote for some person to make him one. Then you must have some mentors or seniors who are already aware of such things.

They should have told you about such things; otherwise, the studies of accountants are also comprised of this knowledge. But as we are all not accounting students or have any experience,  this topic is really a good help for those who don't have any idea before.

Your tips are awesome, I think you should add another tip of another security level in making Transaction from the organization's funds. Which is similar to multi signature wallets. In this, if you are the custodial of the organization's money, then in order to use them, you have to get permission, but of course you might not remember or don't want to take permission, so those people should have to set a setting in the bank, that once we 2 or 3 people approve the transaction, then you are allowed to transfer the funds.

I think this system is known as Dual control system.

I totally agree with you friend. Because what you describe is very real and happens everywhere. Personally, I am also sometimes confused by the behavior of people who dare to corrupt funds within an organization or within the government agency where they work. So in my personal opinion, do people like that never see the news, because there are lots of reports about people being punished for committing corruption? Do these people have no fear? However, what is clear in my personal opinion is that the main factor in someone committing acts of corruption is being too greedy and unable to resist the temptation of large amounts of money (belonging to a company or organization). Indeed, in some cases of corruption the reason is that it starts with borrowing. But in my personal opinion, the main point is definitely greed and not being able to resist temptation. Because if people are not greedy and are able to resist temptation, I am sure they will not dare to steal even half a penny from the organization/company funds entrusted to them.

So, choosing someone to serve as treasurer is not an easy matter. Because we all certainly don't know in depth about how to choose people who are truly honest and responsible. Because humans always change, be it their attitudes, personalities, or habits. So it is possible that people who are initially honest can turn into dishonest people. Therefore, to avoid corruption, I think financial affairs must be transparent and known and supervised by everyone in the company or within the organization. So if an organization/company's funds decrease, everyone in that organization/company will definitely rush to find out where the money went.

Everyone will have a valid account when you possess transparent documents shared with every member. In this context, members' roles encompass not only scrutinizing the treasurer's actions but also participating in correcting financial discrepancies should any errors occur in the organization's financial dealings. After all, humans are not infallible, and forgetfulness is a natural trait. To help minimize the treasurer's mistakes, it's reasonable for members to assist in finding valid evidence regarding the flow of funds from the treasurer.

If the treasurer uses organization funds to buy food, it will reflect as a negative balance in the books. Essentially, maintaining separate personal and organizational wallets serves as a straightforward reference to detect calculation errors.

Using organization funds for small debts temporarily is permissible, but within reasonable limits. It might function as a lifesaver when you forget your wallet at a restaurant during lunch, which I believe members would understand as a reasonable occurrence. However, it should not be employed for acquiring anything unrelated or extravagant, as that could lead to significant problems.

You will have to be professional in this case scenario, and it's common thing to have a separate account to your business account to avoid the mix of transactions, that might cause inaccuracy and errors which will affect the company's budget. These principles were already taught in a course related to accounting, so most of the company are hiring people with educational background related to accounting, since they are the one that are capable in managing finances. (In my country PH)

Some people would be tempted with the amount of money on their hands, but always remember that once you used it on your own, it could be consider as a theft crime. That's why it's a crucial role for you to handle money, which is what you signed up for. Even a small discrepancy could be deducted to your salary. Even if you own a business, separating business account and personal is always a must. You wouldn't know how much funds to budget you still have to circulate the money once again by buying resources. There's a lot of factor to consider if you do this thing.

It's a must to separate your personal account and company account since it will make you easier to track the transaction, combining it will make you need to record it every single transaction, otherwise you will lose count.

Open a new account isn't hard, if you think it will cost you some money, you shouldn't start a business when you lack of money since there would be many unnecessary spend may happen.