One of the most common occurrences in bookkeeping is owners using funds from the company accounts for personal use.
Personal transactions should always be kept completely separate from business transactions.
Among other issues, the work of separating personal from business transactions when reconciling accounts is going to cost a business owner money by having to pay the bookkeeper for doing this work.
Additionally, the businesses accountant won’t want to see this type of transaction either, and again it will cost money as the accountant will tend to scrutinise the accounts more closely.
The aim is to maintain a set of accounts which relate solely to the business and deliver reporting information that is clear and concise.
There are sometimes expenses that can be split between personal and business and your bookkeeper is best placed to know which are allowable and which might be dubious. Typical transactions of this kind are phone bills, vehicle expenses, some utility bills, etc. At the outset of the bookkeeping engagement these should be discussed, and a strategy developed to manage how these transactions are processed.
The best overall solution is to setup a separate bank account for personal use (it’ll take maximum of 2 hours out of 1 business day) and keep business bank accounts solely for business.
Once done, this step also allows the business owner to realistically set out an amount they can regularly withdraw from the business account, and it makes cash flow planning much simpler.
In the run up to any reporting period it is always best to review any suspect transactions to ensure that “a line isn’t crossed”, which could possibly trigger an audit.