Topic: Dangers of combining company and personal funds in the same account - page 5. (Read 668 times)

The real question is there any company that still doing this kind of funds keeping within the officer because the last time I experienced this kind of model is on my school back in college which our treasurer store our funds on his own wallet. 

All companies nowadays using bank to deposit their funds and it was owned by multiple people and require multiple signature to access and withdraw funds. There’s no serious company that will hire a treasurer instead of using bank to save funds because this is really dangerous.

Normally as a manager of a company or a CEO supposedly, it is best for you to always have a separate account with your business account most marketers and account managers will give you the advice of not wanting to run your entire financial activity on one account. Most cases it's even advised to have more than one company account, with different account managers. The complexity of running a business is too flexible to want to mix it with your family or your private money, you have staff's to pay, you will advertise your product all of this cost money, so it should be separated so you would know  your operational cost and what the company is generating so you could check and balance ⚖️ your business, to know if your making profit.

Business and personal, two different issues in the life of every individual, statement below.
This will clearly pose a big danger from an economic perspective, especially if your company is growing rapidly and at the end of the story if the two pieces of money are combined into one box then everything will fall apart.

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The company has employees and a treasurer, all professions are in the company, within the company there is a financial management system to determine needs and goals for the development of the company being managed, The company has separate accounts in its name, so it is not a good idea to combine one account.
Personal accounts also have their own role for our personal needs, wives/husbands automatically know about personal accounts, Well, if the company's money is combined with personal money, it is clear that the company will go bankrupt, various factors, cannot be explained here one by one, which is clearly very dangerous.

You really need to understand the fundamental principle of running a business if you're thinking about mixing your personal funds and company funds. The business entity is separate and distinct from the owner; that's the essence of the business entity concept. In accounting principles, it's crucial to keep them separate. When you have a business, you should only account for the transactions of the business itself. You can't include your personal transactions because that will not provide an accurate picture of the business's financial status. We're specifically talking about the income and expense status, commonly known as the income statement in accounting terms.

OP, you are right one must not keep organization funds in where he can reach it easily, especially when he puts it in his house. This might be very risky when you will face some challenges that will lead to you using such funds, believing that you will be able to replace it. What if the funds is needed urgently by the organization and you can't afford to replace it at that moment. This will bring distrust,shame, embarrassment and tarnish of image. This is why one needs to avoid such act of mixing organization funds with your own personal funds because, must be tempted to use it. Putting the funds in the bank or channel it to the right person that should be in charge is the best for peace of mind.

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.

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.