If I commingle funds in one account for two businesses how do I account?
Full Question:
Answer:
The obvious question is why are you only using one account for two businesses. Talk to your bank's representative, and you can easily set up another account in order to properly divide the funds between the two businesses and keep them separate. Otherwise, you are faced with trying to maintain two ledgers of credits and debits - one ledger for each company - while having the money pooled in the one account. This is just a really hard way to try to do things, and makes mistakes and problems much more likely. The fact is you are automatically violating basic accounting principles by using one account for two businesses. It is not necessarily "against the law," but it may cause you trouble at tax time, and errors on your taxes could result in legal trouble from the IRS. Get another account and divide the money properly.
