Two Books One Bank Account

by Maria

Bookkeeping and audit headaches from co-mingling funds from two businesses

Bookkeeping and audit headaches from co-mingling funds from two businesses

I have to manage two sets of books. Due to increase on bank charges nowadays, my boss asked me if we can only have one bank account to manage these two books. If we went this route, I would then prepare a journal entry due to-due from. I'd like to know the pros and cons on this idea.

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Hi Marie,

My first reaction is, I guess you can but I sure wouldn't if the two companies are in fact two separate entities! If it is one entity that has a DBA (doing business as), then go ahead ... just ensure you have the "classes" feature turned on in QuickBooks.

I will assume the business structure for both companies is incorporation. This means each corporation has its own separate legal identity. Before co-mingling cash funds, the relationship between the two companies would have to researched. When researching, keep in mind the basic GAAP principle that a business should keep its affairs separate.

I can't help but think that any false savings from operating one bank account would be lost in increased bookkeeping and financial statement preparation costs. You'd have to be up on GAAP rules pertaining to inter-company transactions. While it can be done, it complicates the books.

You need to be aware that it would not be one journal entry Maria. Every transaction would have to be entered twice ... once to the inter-company account of Company 1 and again through the inter-company account of Company 2. Each inter-company would also have to be reconciled to each other.

Consider what would happen if you are audited. You are inviting the auditor to examine both sets of books. Certain types of transactions between corporations require a physical exchange of monies. A journal entry does not suffice.

As a bookkeeper, you want to be aware of third party civil penalties. Is the reason for "complicating" the books due to dishonest or illegal activities? Nowadays we also have to be aware of FINTRAC reporting rules.

I would like to remind all bookkeepers, that you have the right to leave a client or turn one away.

In my opinion, without having the specific details pertaining to this particular case, I think in general this is a bad idea. Before going this route, speak with your accountant.

Comments for Two Books One Bank Account

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Oct 28, 2014
Re: Two books one bank account
by: Maria

Thanks so much, Laura. It took some time for me to think over your answers. I'm giving you more info so that you have a bigger picture to answer.

We use Sage (a.k.a Simply Accounting), do you know if Sage has "class" as in Quickbooks?

We are a charity. At the end of the year we consolidate our books into one as there is only one charity. The reason why we have two books is because have two buildings and we want to know each building's expenses.

Thanks again Laura.

Oct 28, 2014
by: Laura

Given what you have told me, you should certainly be able to keep one set of books with one bank account. You just need to turn on the classes or location features of your software. I am not familiar with Sage but I believe Sage refers to them as cost centers. You can find a discussion about this at:

Hope this helps.

Please keep in mind that charities in Canada have special reporting requirements that are different from "for profit" businesses. They even have their own GAAP standards which I am no longer familiar with. So please be cognizant that GAAP for charities and/or CRA may require you to account for this differently.

Oct 29, 2014
Re: Two Books One Bank Account
by: Maria

Thanks so much for your answers, Laura, it really helps.

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