Mixed Personal and Business accounts

[AC Marsh]

I have a small consulting business which is an LLC (me 99%, wife 1%) 
that gets taxed as a partnership (1065).

The wizard (before I discovered the power of GnuCash) in Quickbooks Pro 
2007 set me up as (roughly translated):

Equity:Opening Balance
Equity:Me:Draws
Equity:Me:Equity
Equity:Spouse:Draws
Equity:Spouse:Equity
Equity:Retained Earnings

I would think that I might change the names to be:

Equity:Opening Balance
Equity:Me:Draws
Equity:Me:Contributions
Equity:Spouse:Draws
Equity:Spouse:Contributions
Equity:Retained Earnings

or something similar.


Andrew Sackville-West wrote:
> On Wed, Nov 07, 2007 at 10:28:53PM +0000, Karl Grant wrote:
>> Hi again,
>>  I'm trying to separate my (very small, side-) business and personal
>> accounts. Currently they have been together in the one file although the
>> base accounts (assets / liability etc) are duplicated; My thinking was that
>> anytime I purchases something for personal use I could enter the transaction
>> as follow:
>>
>> Credit Business Assets:Current Assets:Current AC;
>> Debit Personal Expenses:Gifts
>>
>> Thought that was a good idea until I sat down to work out my taxes and found
>> that there was no way to track the money in and out of my business!
>>
>> I would like your learned opinions on the following before I implement it,
>> advice, criticism or general mockery accepted :-)
> 
> okay... your mother was a hamster and your fa... oh, that was a
> joke. sorry...
> 
>> 1) Separate the business and personal accounts into two separate files
> 
> definitely the right move, always.
> 
>> 2) Any money spent on personal use, by cheque or credit card, is entered
>> into a Equity:Drawing account
> 
> yup. and it becomes income to you.
> 
>> 3) this amount is entered into the personal set of accounts under
>> Income:FromDrawings and as an Expense in the relevant account
> 
> okay.
> 
>> 4) Money going the other direction (probably cash) Personal to Business is
>> entered into a Expense:ForBusiness account (is this right?)
> 
> depends on what you want to do with it. If you are investing it in the
> business, then it is not an expense. THis is where I get fuzzy on it,
> but it becomes some kind of asset as shares of the company. Might be
> better to call it a loan. Then the money above, coming back out of the
> business is a return of principal (and thus not income) until you've
> paid it all back.
> 
>> 5) the same amount is entered into a Equity:Personally Added Capital (any
>> better names?) and the relevant business expense
> 
> only if you're investing the money. If you're loaning it, then it is a
> liability.
> 
>> Sorry if the terminology is a bit all-over-the-place, but I've no formal
>> experience with accounting.
> 
> IANAA
> 
> A
> 
> 
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