sole proprietorship with respect to my PERSONAL books?

[jcard21 xxxxxxx]

On Wed, Feb 13, 2013 at 6:19 PM, Paul Elliott
<pelliott at blackpatchpanel.com> wrote:
>
> I have separate bank accounts for business and personal.
>
> I keep track of both separately. That is why I have 2 separate
> books.
>
> But reality is that I had to fund the business with personal
> money. And that I intend to spend personally some of the money that the
> business makes.
>
> Thus money has to flow between the entities.
>
> The question is, how to account for this, when I have 2 sets of books
> like everyone recommends. No one would want to own a sole
> proprietorship hermetically sealed off from the rest of one's
> life. People create sole proprietorships to make money that they want
> to spend.

At the risk of making you more frustrated:

• You are still THINKING of your personal finances and business
finances as one entity (re-read your statements, above: "money has to
flow", "No one ... hermetically sealed", the business makes money you
personally want to spend); This is incorrect thinking.

• Personal and Business Accounting is to be kept separate, in gnuCash
AND in your thinking.

• To help, try thinking of the business as SOMEONE ELSE's business.

• Why are you PERSONALLY give this business money? a loan, an
investment, are you buying a product, something else?

• Why is the BUSINESS give you PERSONALLY money? A salary, a loan
payback payment?

• EVERY transaction between your PERSONAL and BUSINESS entities, no
matter in which direction, you need to give a separate logical
accounting reason for the transfer.

When you can answer these questions (we cannot answer them for you),
then you will know how to set up your gnuCash accounts to account for
these transactions.

I truly hope this helps you.

--
jcard21