Comingling Accounts has always been one of the worst bookkeeping habits “in the known universe,” as we have stated in a previous blog. With the financial upheaval of the coronavirus came a flurry of bad bookkeeping habits, as people struggled to retain their businesses. We saw a huge reoccurrence of the comingling habit in the accounting books of clients that recently reopened their businesses successfully.
Don’t Worry, Your COVID-19 Shut-down Books Won’t Shock Us
No expert at Gavrilov & Co would ever express horror at this habit. However, we cannot help but notice a new trend in commingling personal and private spending.
After the shutdown and reopening of many businesses we are not surprised to see many business owners confront us with tons of unstructured data, and a rampant commingling problem.
Comingling Accounts: Definition of a Bad Habit
The term commingling accounts sounds a little like a bad country-western song. However, the meaning is quite simple. Briefly, “Commingling is defined as the sharing or pooling of personal and business assets. This can occur in multiple ways between the owner and his/her company, or between multiple companies owned by the same individual(s).”
Now, this means more than the traditional assumption that commingling only means neglecting to open business bank accounts. You Might Be Comingling Accounts without realizing it.
We certainly understand that recent extreme circumstances might have caused a little comingling. However, we can help you stop it before it becomes a business-draining habit. We also hear many business owners deny they would ever mix monies in this way.
The comingling accounts habit in the “post-COVID-19 shutdown era” is actually a little bit new. You see, it is not just a bad habit, but a collection of many little ones. There are dozens of types of comingling and they can all become bad habits. Certain types of commingling are actually illegal.
Like the coronavirus, this bad bookkeeping habit can exhibit many symptoms. Read on and see if you have caught this trend as you have re-opened. You just might need a little Gavrilov & Co help to cure it.
The Many Symptoms of Comingling Accounts after the COVID-19 Shut-down
Many business owners claim they never indulge in commingling accounts. And yet, we have shown them that they have done so. “For example, it may be convenient for you to take a “loan” from the company, with the intent to pay it back.” But, even now as you are generating a profit, you might have forgotten to formalize the loan.
Gavrilov & Co: Hard Advice-No Comingling Aloud
Congratulations on re-opening your business. Certainly, we advise you to check your best practices. Take a look at the below shortlist of five of the most severe symptoms of commingling. Gavrilov & Co. can help you break this bad bookkeeping behavior. (We remind you these are just a few of the ways commingling can infect your business.)
1. Have you been depositing corporate monies into personal rather than corporate accounts (or vice versa)?
2. On the one hand, are you paying personal obligations with company funds?
3. On the other hand, are you still finding yourself paying company obligations with private funds?
4. Have you simply failed to set or re-set your separate company bank accounts?
5. Are you still blending your bank accounts with those of your business?
Five More Signs and Symptoms of Account Comingling
Those are our top five symptoms of commingling accounts. However, but let’s look at five more. These might be more subtle. But, they are just as detrimental to the new life of your business re-opening.
6. Did you use the services of your own company, and forget to pay for them? (Cringe-worthy.)
7. If you own more than one business, are you “depositing and withdrawing company monies from another business’s bank account?”
8. Did you fail to bill for professional services rendered by one of your companies to another one of your own companies?
9. Have you been moving assets between companies in order to generate or access cash? Alternatively, are you doing this between your company and your private accounts?
10. Are you allowing payments for company services or goods to be made to you, the business owner, as an individual? (Ouch.)
We Can Help You Avoid Comingling Accounts As You Re-open Your Business
To put it simply, let’s get your re-start off on the right foot. Outsource your accounting and bookkeeping needs so you have time to devote leadership to your organization and employees during these difficult times.
New clients who have successfully reopened their businesses should not feel ashamed if the books have become a bit unstructured. We do not want to see your business limited because you lack bookkeeping and accounting knowledge.
As our economy recovers, it’s only a matter of time until the day-to-day bookkeeping becomes overwhelming. You might be tempted into comingling accounts. We are reaching out to help you with expert assistance for your back-to-business books.
Gavrilov & Co knows you’re smart about what you do. Numbers are what we do.
Bookkeeping is not a DIY Skill—Not Really
Before the shut-down and before the re-opening, there was a pervasive, ugly rumor that bookkeeping was easy. It might not be too tough when you first re-start. But as your business begins to attract a healthy profit again, bookkeeping, taxes, and accounting won’t be so easy. In fact, generating your own bookkeeping can be a crucial mistake.
For some of our clients, the re-start of their business has been a re-awakening of values and best practices. Comingling accounts is only one mistake that can cause your business severe accounting problems. Make an appointment with our experienced accountants and business advisors. and we will appraise you of others.