Small biz: personal vs. company accounts hierarchy?

[Mark Eackloff]

Derek Atkins wrote:

>Chris Shenton <chris at shenton.org> writes:
>
>  
>
>>I'm pretty new to gnucash but would really like to use it for my
>>one-person company which operates as an LLC.
>>
>>I can create personal accounts for banks, credit cards, expenses, etc.
>>But I don't know how to separate this from the LLC in- and out-flow
>>
>>The LLC invoices a client, the client cuts a check to the LLC, it gets
>>deposited in the LLC's checking account.  The LLC then writes a check
>>to me (the human) for hours worked; it also writes checks for
>>business-related expenses including a credit card for the LLC.
>>
>>So how do I set up accounts for me (the human) versus the LLC?
>>    
>>
>
>Two files.
>
>  
>
>>I've read the Concepts Guide and it looks like I should enter LLC
>>invoices submitted and paid via an Account Receivable account.  I
>>presume I record LLC expenses (including paying the human) in an
>>Accounts Payable account.  How 'bout the LLC's checking account (which
>>is where checks from clients get deposited) and the LLC's credit card
>>account? In various reports and summaries, how do I keep LLC assets,
>>liabilities and such distinct from my (human) accounts?
>>    
>>
>
>Two files.
>
>  
>
>>I'm not clueful enough about accounting principals, practices and
>>vocabulary yet, sorry.  Thanks for your help.
>>    
>>
>
>I'd recommend an accounting-101 book..  Or at least read the Gnucash
>Manual.
>
>-derek
>
>  
>
Absolutely.  Two files.  You have two separate legal entities, you and 
the corporation.  Money the corporation pays to you is most likely 
either salary (assuming you are actually an employee) or dividends or a 
combination.  You have a personal file that you use to record your 
income (salary, interest, lottery winnings, whatever), expenses.  The 
corporations has its own file to record its busniness transactions 
including the accrual and paying of salaries to emplyees, dividends to 
stockholders, interest to note holders, etc.

Don't get them mixed up.  The IRS will come after you (someday, if it 
gets around to it).