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Definitely. A duly organized business is a separate legal entity and for proper business-keeping, its transactions should be kept separate from the owner's own transactions.
Business owners intertwine business and personal finances all too often
When you open a business, one of your first tasks should be to open a business bank account. It is important to keep your business banking separate from your personal banking. It's not enough to just keep separate records. You should actually keep the money physically separate in different bank accounts, one set up as a business checking account. Some business owners even use different banks for their business and personal accounts, one being a business bank only. Here are some reasons to keep your business funds separate from your personal funds
Imagine your checkbook and your bank statement if you mix your business and personal transactions. Now imagine that over the course of a year. That's what you would have to deal with at income tax time if you mix your personal and business finances. No one wants to deal with that mess. If you have a separate account for your business transactions, then you have a clean record to give to your accountant at the end of the year. Remember to keep all your invoices and receipts to match up to your checkbook and bank statement entries and you will be in good shape when income tax time rolls around.
Absolutely, businessmen should have to maintain their personal bank accounts separately. Because to reflect true and fair position of the business financials.
Definitely...A business is a separate legal entity. According to IFRS we cannot mix the personal & business needs. Thanks
Thanks for invitation,
Yes of course, as they have two different legal entities and the bank has to deal with them as a two sepaerate clients.
The business deals are totally separate from personal deals. First of all, Joining them is a hardship for Accounting and Tax return purposes. Whatever may be type of business concern, it is not a good practice. But many accountants are forced to undergo this tedious process because of the bad habits followed by the businessmen but not all. It is also very tedious to make them understand why such practices should not be followed.
Dear Maya,
There is one accounting concept known as "Entity Concept". It states that Business is a separate person and an owner is a separate person.
Basically divided into Artificial Person (formed under an Act) & Natural Person. For example, Mr.X Started business as X & Company. Now let's analyse this;
1. Mr.X - Natural Person
2. X & Company - Artificial Person (formed under an Act).
This rule is the demarcation line for the banker for deciding the type of funding. Hence banker classify the borrowers in
1. Retail Funding - Funding to natural persons.
2. Corporate Funding - Funding to Artificial persons.
Assessment of the both kind of lending is based on the above two classifications.
If a person is borrowing in the individual capacity then, in this case, the method of assessment of the eligibility of loan and risk assessment are different for the banker.
Likewise, if the person is borrowing in the corporate capacity then the method of assessment of the eligibility of loan and risk assessment are different.
Also, banks have tailored products according to the requirement of Individuals and corporates. Also according to law of the land, there are different kinds of rules and regulations which borrowers and bankers have to satisfy to avail and grant loans. These requirements vary depending upon the type of the borrower ie. individual and corporate.
Hence a person has to differentiate between the fund requirement that the same is for personal or for business purpose.
Thanks
Exactly It is just like professional and private life, never join them together.
