To The Point
News from First Tier Accounting


October 2014
In This Issue
The Risks of Commingling Business & Personal Funds
QuickBooks Corner - QuickBooks 2015 is Now Available
This Month's Quote

Do not go where the path may lead, go instead where there is no path and leave a trail. -- 
Ralph Waldo Emerson 

Good to Know
905 million tablets are projected to be used globally for home and business by 2017 - three times today's current usage.- Intuit Inc. 2013 
Useful Links

 

Connect with Me




"Like" First Tier Accounting on Facebook for a chance to win a gift card!

Like me on Facebook

View my profile on LinkedIn
First Tier Accounting is committed to helping small businesses maintain accurate and timely accounting records, understand their financial data and use this information to better manage business operations.
Greetings!

Happy Fall!

I would like to say thanks again to those of you who donated to my fundraising for the Walk to Defeat ALS last month.  Our family walked in memory of my brother, Steve, who lost his battle with ALS last year.  I am happy to report that I met my fundraising goal (yes, I did do the ice-bucket challenge as promised....you'll have to "friend" me on Facebook if you want to see the video), and our team also met its fundraising goal.  In fact, the Twin Cities ALS Walk this year was a huge success, with a record number of walkers and record donations!! Your donations will go to help support those with the disease, as well as their families, and to fund research for a cure, so your generosity is much appreciated!

Now on to business....

This month's article is about the risks of co-mingling business and personal funds.  It may seem harmless enough, especially if you have a sole proprietorship or micro-business where funds are easily moved between personal and business accounts. But beware! Check out the article below to see why this practice is not advised and how you can set up procedures to protect your personal assets from potential risk.

In the QuickBooks corner, I give you a quick update on QuickBooks newest release.  Next month I will be doing a more in-depth overview of the new features and functionality in the 2015 desktop products. 
 
Feel free to share this newsletter with colleagues, friends or business owners who you think might benefit from the information. 
   
Have a great month!

Tracey
763.227.1841
The Risks of Commingling Business & Personal Funds
Commingling of funds is something that I see fairly often when working with clients and many business owners are unaware of the negative consequences of such a practice.  Simply put, commingling means mixing together personal funds and business funds.  An example of this would be paying your personal mortgage with the business checking account.  Or using your personal checking account to pay a business bill, such as office rent or phone.

In a sole proprietorship, commingling of funds is common and not a huge issue.  This is because a sole proprietorship makes no legal distinction between the owner and the business.  Thus, the business debts are the owner's debts, even if the business is operating under an assumed name (i.e. Betty's Hair Salon).  However, there is a huge legal risk with a sole proprietorship, in that the owner's personal assets can be at risk in the event the business has unpaid debt or wants to file bankruptcy.

Because of the risks involved, most businesses choose to form some type of legal entity, such as an LLC, S Corp or C Corp.  Commingling of funds for these types of entities is strictly prohibited and can have serious consequences to the business owner if the rules are not followed.  The most serious being the loss of the personal asset protection provided by the business entity.  If the business is found not to comply with the rules for keeping business funds and other assets separate from personal, the business can lose its standing as an LLC, S Corp or C Corp.  This is called "piercing the corporate veil".  When this happens, the owner's personal assets can be seized to pay business debts.  Not something a business owner wants to happen.

So, how can you avoid commingling and make sure that you keep your personal assets safe?  The first step to pay business expenses with business funds and vice versa.  This means you should have separate checking and credit card accounts for the business and use them strictly for business expenses.  If the business is short on cash, you can loan money to the business or contribute equity to the business, rather than pay for the business debt with your personal funds.  You should also take a salary and/or draw (this varies depending on your business type) in order to have funds to pay your personal debt.  Personal bills, such as a mortgage, should always be paid from your personal account.

If you use your personal card to pay for business expenses, such as meals or travel expenses, fill out an expense report listing the items and purpose, include copies of the receipts and reimburse yourself with a business check.  If you accidentally use your business account to pay for something personal, make sure you pay the company back promptly.   

Following these simple rules will go a long way towards maintaining the separation of business and personal funds.  If you would like to discuss your business's current procedures in more detail or would like more guidance on setting up procedures to avoid commingling of funds and other business assets, please contact me at Tracey@FirstTierAccounting.com to schedule an appointment.
 
QuickBooks Corner - QuickBooks 2015 Now Available

ProAdvisor Logo


Intuit recently released its newest product - QuickBooks 2015.  They release a new product each year, and there are always some upgrades and additions to the product.  If you are currently using QuickBooks 2012 or older, I strongly encourage you to upgrade to the latest version by the end of this year.  Intuit only supports the 3 most current versions of QuickBooks, so that means support for the 2012 version will be going away early next year.  


 

I recently attended a virtual conference where I learned about all of the new features of 2015 and I can't wait to share them with you in next month's newsletter!  I will also be discussing QuickBooks Online and how to decide if the desktop version or the online version of QuickBooks is the better choice for your business.


 

If you are interested in upgrading to the new QuickBooks 2015 program or have questions regarding the different versions of QuickBooks, please contact me to discuss which one is right for you.  I can also get you a significant discount on the purchase price, as well as add-on services and products, such as payroll service and check forms, if you purchase the products through me.  Give me a call at 763.227.1841 or email me at Tracey@FirstTierAccounting.com to get details!