"Packing two or more articles in a manner that the quantity or value of the individual items cannot..."
No. That's not it. I'm talking about Accounting. But more specifically: COMMINGLING.
BusinessDictionary.com defines commingling in Accounting as...
"Mixing a firm's cash with personal funds, a practice that always attracts adverse attention from taxation authorities, and may make the offender personally liable for the firm's obligations"
Why is this so important? 3 simple letters: LLC
Those of you who have worked with me know that I do not like the LLC. But it's not because of the nature of it. It's merely because of the way small business owners treat it.
For my purposes as a Tax Professional, it essentially doesn't matter. It's really all about the business structure. But for accounting, the story changes somewhat.
You see, when you create an LLC, you create a legally separate entity. But if you don't treat this separate entity with integrity, you've wasted $130 creating an LLC
I don't commingle. (Yes you do)
Let's talk about a few examples that I see where small business owners commingle.
Probably the easiest one is using the business checking account for a personal expense.
What about the other way around...
You are at the hardware store picking up some materials to build shelving in your shop. You forgot your business debit card because it was an impromptu purchase and use your personal credit card to pay for the business expense. Commingling? Perhaps. Now it's all up to how you manage your bookkeeping.
If you're thinking to yourself "What's the big deal? It's really all my money anyway?" Here is an article I found titled "Commingling of Business and Personal Funds (And Why It Is a Bad Idea)" from Skillern Law Firm, PLLC. (there it is again), an Estate Planning and Business Law Firm in Oklahoma.
The LLC is just one of the reasons I offer Solutions for Small Businesses.
Proper bookkeeping is such an important part of every business. And I mean every business. Whether you build bird houses during your spare time and sell them on your front lawn or design websites for major companies in the area, bookkeeping matters.
If you've been doing something that is making you money, you've got a bookkeeping system in place already, whether you realize it or not. It might be simply putting your receipts in a shoe box or as complicated as trying to solve the accounting equation on QuickBooks. Whatever the system is, you must pay attention to it, understand it, and execute it properly if you want to be successful. Here's a great article I found on the importance of bookkeeping by QuickBooks titled "5 Reasons Why Attentive Bookkeeping is Crucial for Small Business Success".
In a nutshell, does your bookkeeping system...
But most importantly:
Isn't that what the whole purpose was to begin with?
When you partner with me at JDBC Tax Services for your bookkeeping, we will work together to put a system in place that works for your business. You'll learn about
Looking forward to working with you!
Owner, Tax Professional and Entrepreneurial Adviser of JDBC Tax Services. Over 20 years operating businesses and 5 years as a Tax Professional
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