Thursday, July 9, 2009

Mixing business with personal

I've worked in the accounting field now for about 11 years and one thing I can certainly tell you is that if you mix up your personal affairs into your business affairs, things get really sticky.

The sheer volume of entries required to process the accounting alone will cost you big time! There are almost always mistakes made when someone else is trying to figure out whether or not an expense was incurred personally or for the business. You may shop at Sam's, for instance, personally and also for your business supplies. What ends up happening is, the accounting clerk is left to audit every receipt and make decisions and ask a bunch of unnecessary questions...when it is possible for you to write yourself payroll (if that is how you are set up) or a draw check, then pay your personal affairs through your personal accounts.

You shouldn't waste money paying your accountant to process checks written to your home cable company. Chances are for smaller accounting firms like this one, we end up spending an unreasonable amount of time completing the financials and that makes you unhappy, your bank or lender unhappy and we never recoup the loss of time put in vs. amount charged.

Keep your personal affairs-personal and your business affairs-busniess.

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