I don't really know all the fine accounting details of it, however i do know there needs to be separation in some respects, dependent upon your business structure.
I operate as a sole trader in other words i am my business, i have a trading name that is registered as a business name and i use Joel Brown T/AS Orion Networks. My business tax registration number is in my personal name and applies to the business name registered in my name. While i mix the money in the bank and and spend for both business and personal reasons from the account. At the end of the day i maintain financial records for both. I have MYOB Accounting which tracks all of the business transactions, and all the paperwork is separate, and i have little personal wise that has records needed.
Because of the business structure i have available to me the money is effectively my personal money anyway, even though it was income from business activities. If this makes sense.
On the other hand if i was operating a company, then i would need to look at maintaining records in the same way, however the actual cash and accounts would need to be maintained separate to my personal accounts. This is because the money earned by the company is actually the companies money and while i may own the company and it's assets without accounting for it leaving the company it needs to remain there.
Partially i think this is due to how a company is taxed, however as i said i am unsure of the exact little details of what or why.
Bookmarks