Dangers of combining company and personal funds in the same account

[angrybirdy]

It is very danger  I mean who the hell is combining company and personal funds in the same account.
I has couple of bank account with different purposes there is for saving there are for daily transaction and many more.

The danger would be real if you can't track all the debit or credit for personal use or company use. The accountant should pay double for this hahahah

Combining your company and personal funds in the same account is one of the most common problems of a start up entrepreneurs, this is what we called commingling funds. It can be a serious problem and it leads you to a personal liability for your business debts if this can't prevent as early as now. It's best to maintain a separate bank accounts for your personal and business transactions as well as to keep you books diligently, that's why it is essential to have your company accountant/bookkeeper.

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[Alpha Marine]

This is why people should take The entity concept more seriously. The business is a different entity from the owners(s) so it doesn't make sense for a person to have the funds of a business in his personal account.
Even if it's a small business where only one person is involved, it would not be wise to use one account as your business and personal account.

You shouldn't start doing business when you have not registered your business with the appropriate authorities. 
There are structures to make sure just one person doesn't have all the access to the company funds even if you're the owner of the company.

[dezoel]

This is obvious and I doubt that any company would do something like this ever. I mean there isn't even a small company that would do this, or at least should. I think everyone should be smart enough to have a company account somewhere and just deal with them. The bigger ones do not even have an "account", they have an account with the firm they deal with and buy through them and just ask them to make the moves, they do not just login an exchange and make the moves, they tell them, and make the moves that way.

It is important to know that OTC is still a big deal when it comes to bigger numbers and that's how it works. I know smaller companies that invest just thousands, few thousands that's it, and even they don't do this.

[wxa7115]

This is obvious and I doubt that any company would do something like this ever. I mean there isn't even a small company that would do this, or at least should. I think everyone should be smart enough to have a company account somewhere and just deal with them. The bigger ones do not even have an "account", they have an account with the firm they deal with and buy through them and just ask them to make the moves, they do not just login an exchange and make the moves, they tell them, and make the moves that way.

It is important to know that OTC is still a big deal when it comes to bigger numbers and that's how it works. I know smaller companies that invest just thousands, few thousands that's it, and even they don't do this.

I am not an expert on the law but having independent accounts is mandatory and it is not really optional, we must remember that a company is treated as its own entity on the eyes of the law, however if the owner of the company uses the money that is supposed to belong to it in a way that clearly indicates there is no such independence then the company can be treated as if it did not exist.

And this is terrible because if the company was sued not only its assets will be at risk, but the assets of its owner will be up for grabs as well if they lost that lawsuit.

[Fiatless]

Combining your company and personal funds in the same account is one of the most common problems of a start up entrepreneurs, this is what we called commingling funds. It can be a serious problem and it leads you to a personal liability for your business debts if this can't prevent as early as now. It's best to maintain a separate bank accounts for your personal and business transactions as well as to keep you books diligently, that's why it is essential to have your company accountant/bookkeeper.

The business should be seen as a separate entity that should live an independent life from the owner. In the face of the law, a registered business is a person that can sue and be sued. Until business owners understand this concept, their businesses will keep failing. The first thing a business owner should know is record-keeping and many businesses don't care about that because the business is not seen as a person.

Some business owners claim that their inability to read and write has limited them from keeping records and they don't have the money to hire an accountant. I usually tell them that illiteracy is not an excuse because they can still separate businesses for personal dealing. They should simply pay themselves wages or salary and never spend more than their earnings.

[savetheFORUM]

This is obvious and I doubt that any company would do something like this ever. I mean there isn't even a small company that would do this, or at least should. I think everyone should be smart enough to have a company account somewhere and just deal with them. The bigger ones do not even have an "account", they have an account with the firm they deal with and buy through them and just ask them to make the moves, they do not just login an exchange and make the moves, they tell them, and make the moves that way.

It is important to know that OTC is still a big deal when it comes to bigger numbers and that's how it works. I know smaller companies that invest just thousands, few thousands that's it, and even they don't do this.

I am not an expert on the law but having independent accounts is mandatory and it is not really optional, we must remember that a company is treated as its own entity on the eyes of the law, however if the owner of the company uses the money that is supposed to belong to it in a way that clearly indicates there is no such independence then the company can be treated as if it did not exist.

And this is terrible because if the company was sued not only its assets will be at risk, but the assets of its owner will be up for grabs as well if they lost that lawsuit.

Even if it's not mandatory, it's unprofessional to use a personal account to manage business finances and no matter how small a business is, it should have its finances separate from the personal finances because it will make things go wrong since expenses might get mixed if a single account is being used for keeping both business and personal money, and even if it's not an account and its just cash, since most small businesses deal only in cash, it shouldn't be kept together with personal money as things will get out of hand this way.

That's why, one should take a professional approach regardless of the scale of their business and use separate accounts for personal and business finances to keep things clear and precise without having to forget how much the business has earned and how much has been spent and how much is the revenue or loss, etc.

[poodle63]

This is obvious and I doubt that any company would do something like this ever. I mean there isn't even a small company that would do this, or at least should. I think everyone should be smart enough to have a company account somewhere and just deal with them. The bigger ones do not even have an "account", they have an account with the firm they deal with and buy through them and just ask them to make the moves, they do not just login an exchange and make the moves, they tell them, and make the moves that way.

It is important to know that OTC is still a big deal when it comes to bigger numbers and that's how it works. I know smaller companies that invest just thousands, few thousands that's it, and even they don't do this.

I am not an expert on the law but having independent accounts is mandatory and it is not really optional, we must remember that a company is treated as its own entity on the eyes of the law, however if the owner of the company uses the money that is supposed to belong to it in a way that clearly indicates there is no such independence then the company can be treated as if it did not exist.

And this is terrible because if the company was sued not only its assets will be at risk, but the assets of its owner will be up for grabs as well if they lost that lawsuit.

this topic needs comprehensive discussion regarding the law involved but I think the fact that company considered different entity, so long there's clear distinction between what the company owns and what it doesn't own does it means there will be no problem?
but I still agree that company should just have their own bank account, why even bother starting out a company which supposed to be a different entity altogether if the money still combined with personal money just doesn't make sense to me to go through many legal processes and would still combine funds, the main reason people starting out company because they want distinction I guess.
therefore anyone who would think of starting company would instantly have it in mind to differentiate between company assets and their own assets, basically creating bank account for the company since day 1.

[KingsDen]

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.

I haven't tried this, but I know it won't be easy and will not end well. I do not understand that reason to combine personal money with business money when you can obviously separate them. Leaving them together will make your business financial track record difficult to trace. Difficult to calculate tax and other spendables.

In the future, when you will need auditing, everything will fall apart and the most important thing is that you will either be using your personal money to fund your business or you will use your business money to fund your personal life

[jeha2015]

It is very danger   I mean who the hell is combining company and personal funds in the same account.
I has couple of bank account with different purposes there is for saving there are for daily transaction and many more.

Combining company funds with personal funds cannot be recommended because this will be very dangerous in managing finances. It should be separated, this mistake is often made by small business people, their business does not develop or even goes bankrupt because financial management is mixed up. If this continues to happen continuously by mixing personal money and business capital money out of necessity, because they think that the important thing is that the family's needs are met but the bad thing is that you are tired of business but have no savings.

The danger would be real if you can't track all the debit or credit for personal use or company use. The accountant should pay double for this hahahah

This will definitely happen, without having a good accountant the risk will only pay double. We should be able to anticipate.
1. Separate personal and company money
2. Separate physically
3. Make cash flow records (money in and money out
4. Make a plan for using the money
5. Postpone sales plans that are not useful
6. Control cash flow
7. Be strict with yourself and be more disciplined

[wxa7115]

I am not an expert on the law but having independent accounts is mandatory and it is not really optional, we must remember that a company is treated as its own entity on the eyes of the law, however if the owner of the company uses the money that is supposed to belong to it in a way that clearly indicates there is no such independence then the company can be treated as if it did not exist.

And this is terrible because if the company was sued not only its assets will be at risk, but the assets of its owner will be up for grabs as well if they lost that lawsuit.

this topic needs comprehensive discussion regarding the law involved but I think the fact that company considered different entity, so long there's clear distinction between what the company owns and what it doesn't own does it means there will be no problem?
but I still agree that company should just have their own bank account, why even bother starting out a company which supposed to be a different entity altogether if the money still combined with personal money just doesn't make sense to me to go through many legal processes and would still combine funds, the main reason people starting out company because they want distinction I guess.
therefore anyone who would think of starting company would instantly have it in mind to differentiate between company assets and their own assets, basically creating bank account for the company since day 1.

Again I am not really an expert on that topic but as far as I know this is a must, this is legislation that comes from many hundreds of years ago, in which on the past if a person made a bad business decision then not only they lost the money they destined towards that opportunity, but anyone that invested money with them could sue them and get all their assets.

However such a thing was stifling the economy and the development of countries, so companies were created as entities which limited the liability of their owners and they could lose only what the company owned and not their personal assets, so if there is no such distinction then a judge could easily declare the company does not exist and the people that are owed money by your company could go for your assets.

[Bananington]

Any good business person knows by now how to keep personal funds separate from funds meant for projects. In this regard where we talk about a company, it is unethical to even combine or receive payments to ones personal accounts.
A registered business or company is always required by law to have an account separate from the owners account, because the payment of taxes would have to show the company records of transactions and its turnover report at the end of a fiscal year.

The dangers are clearly spelt out and as a company involves many individuals working within it to make it successful, there has to be trust that the money coming in is there in a safe account and can be accounted for, so as to avoid issues of unpaid salaries or wages.

[boty]

Any good business person knows by now how to keep personal funds separate from funds meant for projects. In this regard where we talk about a company, it is unethical to even combine or receive payments to ones personal accounts.
A registered business or company is always required by law to have an account separate from the owners account, because the payment of taxes would have to show the company records of transactions and its turnover report at the end of a fiscal year.

The dangers are clearly spelt out and as a company involves many individuals working within it to make it successful, there has to be trust that the money coming in is there in a safe account and can be accounted for, so as to avoid issues of unpaid salaries or wages.

Business people should separate their personal funds from their business funds so that there are no mistakes in making their business financial reports and if they insist on combining personal funds and the business they run, of course this will be a problem and make them lose the trust of their employees. You are right, if they don't want their employees to lose trust in them of course they have to have clear financial reports and not mix up their funds and the funds of the business they run.

[Fara Chan]

Business people should separate their personal funds from their business funds so that there are no mistakes in making their business financial reports and if they insist on combining personal funds and the business they run, of course this will be a problem and make them lose the trust of their employees. You are right, if they don't want their employees to lose trust in them of course they have to have clear financial reports and not mix up their funds and the funds of the business they run.

This has become a very basic job for every businessman who wants progress in his business, because business capital is mixed up with money for his daily needs. It will be very difficult for a business owner to calculate the profits from his business so that there will be no progress whatsoever from his business and it will be easier for him to get into trouble because the basic source of his money will be unclear. Meanwhile, the employees themselves also don't want to know about difficulties other than their own salaries after they finish working.

[so98nn]

One word: Worst decision. This can lead to the collapse of a business in a short period of time. Maintaining an account is vital because you need to have liquid funds available all the time in a business. Whether it is investment into purchasing new material, investing in expansion, or from stuff like employee salaries, bonuses, and other emergency funds, it can help. If one is carrying the same checking and savings account then it can end up in disaster if personal gains increase over the period of time. For example, one may end up putting money into their luxury and leisure time which is the money that should have been for the things mentioned above. That is the risk when it comes to small businesses. We have already seen how big fintech works. They have public shares available that make it a perfectly stable company on the balance sheet. Plus when it comes to publicly operated company they have to show their balance sheet every year. Thats how they keep growing with the time. For privately own company the risk is always there but it depends on how they operate it.

[Mame89]

Business people should separate their personal funds from their business funds so that there are no mistakes in making their business financial reports and if they insist on combining personal funds and the business they run, of course this will be a problem and make them lose the trust of their employees. You are right, if they don't want their employees to lose trust in them of course they have to have clear financial reports and not mix up their funds and the funds of the business they run.

things get worse by mixing personal money with company money or a business going bankrupt. Even if you have used a cashier application no matter how sophisticated it is, if you still mix personal money and business money it will damage your own financial management system.

That's why you have to be able to separate these two types of money well, even for businesses that have just been started, capital needs to be fixed and running so that the income must not be mixed with your personal money, you must not take the money from sales to buy any personal needs. especially if you have built a large business because financial management will be the target of an audit, differences may be discovered during the audit, which can result in large losses.

[Lorence.xD]

Business people should separate their personal funds from their business funds so that there are no mistakes in making their business financial reports and if they insist on combining personal funds and the business they run, of course this will be a problem and make them lose the trust of their employees. You are right, if they don't want their employees to lose trust in them of course they have to have clear financial reports and not mix up their funds and the funds of the business they run.

things get worse by mixing personal money with company money or a business going bankrupt. Even if you have used a cashier application no matter how sophisticated it is, if you still mix personal money and business money it will damage your own financial management system.

That's why you have to be able to separate these two types of money well, even for businesses that have just been started, capital needs to be fixed and running so that the income must not be mixed with your personal money, you must not take the money from sales to buy any personal needs. especially if you have built a large business because financial management will be the target of an audit, differences may be discovered during the audit, which can result in large losses.

Thing is, when you are working in a company or corporate job, if there's short in the money you holding in their money, of curse the blame will be put into you. No matter how good you are or experienced, when there's a case scenario that there's unusual transaction detected, you can easily provide the transaction history of the company account since you have your own personal account, cause once you can't give any proof and records, then you might get fired cause mixing would get messy to the records.

I actually understand your point that, having a company's funds doesn't mean you have the right to use it for your essential needs especially in the emergency one. You can take loans but you might go to jail if you use this especially without permission but mostly they doesn't approve the use of company's funds. That's why in this role, they really find someone who's capable on handling finances of the company.

[lizarder]

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.

There are accounts that you can always ask for at the bank when you want to check your expenses and income and maybe I prefer to separate company funds and personal funds. The company has procedures for running it, even though you are the owner, when you place personal money with company money it will end up in different conditions and there is a possibility that the company will experience problems. If the money from both is combined, I think the company owner doesn't understand how to manage the company well.

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.

I don't understand how this incident happened, but everyone who tries to place capital in a particular company must be based on an agreed agreement. How he had plans to buy the bus was beyond the company's knowledge and didn't certain purchases have to be approved by several people who had control over the company? In the end, he had to shed tears over the carelessness he had made even though he was the head of the company.

I often see companies having separate bank accounts that are managed well by people who are given responsibility. The company should have a much better system and incidents like this would not need to happen if they understood how to run the company. This is a kind of company that doesn't have a work system and doesn't have main tasks that need to be taken care of based on the responsibilities of each position.

[Quidat]

Business people should separate their personal funds from their business funds so that there are no mistakes in making their business financial reports and if they insist on combining personal funds and the business they run, of course this will be a problem and make them lose the trust of their employees. You are right, if they don't want their employees to lose trust in them of course they have to have clear financial reports and not mix up their funds and the funds of the business they run.

things get worse by mixing personal money with company money or a business going bankrupt. Even if you have used a cashier application no matter how sophisticated it is, if you still mix personal money and business money it will damage your own financial management system.

That's why you have to be able to separate these two types of money well, even for businesses that have just been started, capital needs to be fixed and running so that the income must not be mixed with your personal money, you must not take the money from sales to buy any personal needs. especially if you have built a large business because financial management will be the target of an audit, differences may be discovered during the audit, which can result in large losses.

Thing is, when you are working in a company or corporate job, if there's short in the money you holding in their money, of curse the blame will be put into you. No matter how good you are or experienced, when there's a case scenario that there's unusual transaction detected, you can easily provide the transaction history of the company account since you have your own personal account, cause once you can't give any proof and records, then you might get fired cause mixing would get messy to the records.

I actually understand your point that, having a company's funds doesn't mean you have the right to use it for your essential needs especially in the emergency one. You can take loans but you might go to jail if you use this especially without permission but mostly they doesn't approve the use of company's funds. That's why in this role, they really find someone who's capable on handling finances of the company.

Do you really think that corporate bank accounts or something that do talk about multiple owners or investors would really be  that allowing for such thing to happen or this kind of set-up?
If we do speak about company bank account then pretty sure that your co-investor would really be setting out that kind of approval whenever there would really be transactions be happening specially
on withdrawal then it would really be just that so normal that it would really be that requiring all of those signatures or allowing up someone to take up some transactions which we know that it would really be that impossible to sneak out on making tx without others been knowing. So it would really be that pointless.

In speaking about company money and your personal funds then it would really be that hard to make some trace up everything specially if the inbound and outbound transactions are plenty.
You would really be having a hard time on distinguishing for sure and that would really be that pain in the ass plus tendency on spending on companies funds would really be
high and this is why it would really be that recommended that it should really be that separated.

[Biznesmen]

The savings account and FD are considered for depositing money for personal growth, and for the business, we have different types of bank accounts to deposit, like the current account. Even banks differentiate the account type, and each account serves different purposes too. If your personal and business accounts are the same, you have some issues regarding withdrawing the money at first because there is a limit in each type of account to withdraw money, and it even costs your business's future and isn't funny at all. The next major problem you face is tax. How could you explain your income? That's why people should learn financial literacy before entering any kind of financial situation.

[uchegod-21]

Whether you are running a business for the sole aim of making profit or you are running a non-profit making organisation,  always put it at the back of your  mind that every business is a legal entity and should therefore be treated as such.

Just imagine sharing your bank account with your friend, siblings or even your spouse. Problems arise when you withdraw too much from the account,  the other party might become affected, especially when you tamper with money meant for a particular purpose. It will obviously result in temporary or even long-term misunderstandings. The best option is to split accounts for peace to reign.

When you combine company money and your personal money in same account, both you and the legal entity might suffer temporarily or long-term misunderstanding. Oh yea! You wouldn't notice until you crumble the the business with your constant drawings hoping to pay back which most times,  you end up not paying. Know this, when you withdraw from company's account for personal use, you remain indepted to that company until you pay back. The best option is to put yourself on weekly or monthly payroll. This should compensate you for the stress of running the business.

Again,  it will be difficult to keep proper books of account and where the company is a Limited liability Company,  how do you determine what portion of the company's assets to be used to settle debts in the case of winding up of the company?. Combining company funds with any other account is risky and should be avoided.