A Business Question

[Farrell]

In a past life, when I was president of a corporation, I had two checking
accounts. I found it to be a pain and quite an expense, as well as difficult
to manage. (My company was "Groundwater & Environment, Inc." - I got a call
the other day from a former boss- before G&E - I really knocked him off his
chair when I answered the phone: "Piano Tuning & Service, may I help you?" -
What a hoot! I had not talked to him in at least five years.)

Now, in this business I have only my personal checking account. I use
Quicken Home & Business to track income, expense, etc. I have two Quicken
VISA credit cards - one for personal use and one for business (the Quicken
credit cards are so cool - you use them in the normal way, but then you
download your statements and all purchases are automatically catagorized! -
way, way cool, and so great for good expense records). I use the credit
cards for almost all purchases, and always for all business purchases. That
way, everything is recorded and catagorized, etc., etc. If you don't keep
real good records, or if you live paycheck to paycheck, or for whatever else
reason, separate accounts can help. For me though, I keep my records
separate, I don't incurr many bank expenses, I don't have to transfer funds
here and there, I don't have to balance two or three checking accounts, etc.
I like the simplicity of one account. I think it works well - as long as you
keep good records and use a good accounting system - such as Quicken.

Works for me.

Terry Farrell

----- Original Message -----
From: <Tvak@AOL.COM>
To: <pianotech@ptg.org>
Sent: Tuesday, December 04, 2001 10:40 PM
Subject: Re: A Business Question


>
> In a message dated 12/4/01 8:22:41 PM, cedel@supernet.com writes:
>
> << I agree with Wim that if there is something you really should be doing
to
> be
> legal, then do it. >>
>
> Absolutely.  I don't want to do anything that's not totally above board.
As
> I had mentioned, I did actually register a business with the county
several
> years ago, and therefore I do have a business license, but I don't really
do
> business under that name any more; I use my own name.  I have considered
> changing the name of the business to my own name, but...
>
> <<As my CPA
> says, in my case my business and I are essentially the same entity.>>
>
> That's how I feel.  If I want to do business under my own name, do I have
to
> register my name as a business?   I don't want to do anything illegal, but
it
> seems redundant.  If a client writes a check to me, I would have to
deposit
> it in the business account, but if my Mom writes me a check (for my
> birthday), it goes in the personal account?  Seems like splitting hairs.
> Tax-wise I do claim all my income, so the first check I would claim, the
> second I would list as a gift.  Why pay for a checking account to separate
> things out when they are separated at tax time anyway?
>
> I guess my question was whether there was some tax advantage to doing it
that
> way.  If I could see an advantage to it, maybe it would make more sense to
> me.  Or maybe what Wim is suggesting is that legally I have to.  I've been
> operating on the assumption that a check written to me is a check written
to
> me.  Not to a business.  I provide a service, but it's me who's providing
the
> service.  It goes in my ledger, in which I keep track of every check (I do
> claim everything.) and it goes into my personal checking account, just
like a
> payroll check would if I worked for an employer.  And then I spend it.  My
> business expenses are deducted against all my income at tax time.  I also
> have income from performing and teaching.  I itemize them each in separate
> categories, but my tax man just totals them up, and subtracts my
deductions
> from the total.  Now, I've already come to the conclusion that I need a
new
> tax guy, but am I going to jail for this?
>
> Clyde, you said you deposit your checks in the business account and then
pay
> yourself a salary.  Cash goes in your pocket and you deduct that amount
from
> your weekly salary check?  Is it because of the sales tax issue?  It seems
so
> overly complicated.
>
> I've never been much of a businessman.  I don't mean to pry into anyone's
> personal financial doings, but now I'm thinking I may be doing this all
> wrong.  I certainly want to do things the legally correct way, but Clyde's
> system seems like robbing Peter to pay Peter!
>
> I think I need to talk to a new accountant about all this.  Or perhaps a
> psychoanalyst.
>
> Tom Sivak