[GNC] Transfer between two account files and Hierarchy

[Michael or Penny Novack]

On 12/1/2024 1:58 PM, Grace wrote:
> My situation is that I have personal accounts (CAD), a small business 
> account (USD) and some trading accounts (CAD and USD).
>
> I think I already know the answer, but is it possible to have a 
> transaction across any two of the separate files, i.e. pay salary from 
> the small business account file to the personal account file.
>
> Presuming that it is not possible, I would need to have all three in 
> one file. Which hierarchy would work best? Opinions on a post card 
> please!! :)

First of all, the small business, does IT have its own set of books? << 
yes I know, you are its sole owner, but that does NOT mean it can't have 
its own set of books and be an investment in your personal set of books. 
One advantage of having its own set of books is that you can show those 
(to a prospective buyer, etc.) without showing your personal books.

Salary? Terminology maybe. When you are the sole owner usually a 
"drawing" but let's let that slide. You have been ignoring EQUITY (and 
people have been asking what equity is for). So let's say that small 
business is paying its manager (you) a salary. In the business books 
that would be a debit to expense;salary and a credit to asset:checking. 
In YOUR (personal) books a debit to asset;checking (your personal bank 
account) and a credit to income:salary.

BUT -- here you need to consult the tax rules for your jurisdiction, and 
I would certainly get professional advice. Do you even have a choice? 
(treat as salary or drawing) How does that affect your taxes, the 
business's, yours, etc.

Michael D Novack

PS: If a "drawing", in the business books, not an expense, just the 
owner taking money out of the business. So debit owner's equity (just 
equity if no other owner) and credit checking. In your books, debit 
checking and credit asset:business. Again consult with professionals 
from your jurisdiction, but here in the US your income (from the 
business, for tax purposes, if not a corporation) is NOT because you 
took money out but will be based on the business's profit/loss. In other 
words, here in the US, if I am sole owner of a business (not 
incorporated) and the business made $50,000 I will be reporting that on 
schedule c, GOING TO BE my INCOME  << EVEN IF I DIDN'T TAKE A PENNY OF 
IT. >>