This article concludes the series dealing with if you are in a scenario where you are an entrepreneur and have two small business entities to maintain the bookkeeping for.

As mentioned in the previous parts of this series, this is a rather common scenario and it is vital that you, as the owner of both of these small businesses, understand simple do’s and don’ts when it comes to maintaining basic ethics and integrity within both sets of books.

Typically, what I have seen, is one small business has been in existence for quite some time; then some years later, for reasons which are beyond the scope of this article, the entrepreneur will decide to create another official separate business entity and thus now is responsible for the bookkeeping here as well.

As always, I would highly recommend you obtain advice from a C.P.A. first, prior to creating this 2^nd business entity.

With some business owners in this situation, there is going to be a temptation in NOT creating a separate set of books for the new company.

What I mean here is that the temptation will be, rather than create a brand-new bookkeeping file for the new company, the business owner will opt instead to utilize the 1^st (current) company’s bookkeeping file to ALSO include the books for the 2^nd (new) company as well.

There are obvious dangers inherent within this practice, the most important being the ability to some how separate out all of the financial transactions between the 1^st company and the 2^nd company. Even if you are successfully able to do this, I highly would not recommend this as there is a constant danger of mistakes and mix-ups and confusions that will never end and thus your financial reporting and ability to audit your work will most likely always suffer. It really is NOT worth ever engaging in this practice, just to save a few bucks on bookkeeping software or other bookkeeping time and fees.

So, knowing this, then, do NOT engage in the following (in the 1^st company’s set of books):

1. Do not create “Other” types of accounts just to put all of the 2^nd company’s transactions as a placeholder for now.
2. Do not create additional bank and credit card accounts (in the bookkeeping file) that really belong to the 2^nd company.
3. Do not try and create different locations to differentiate between both company’s books. If each company has its own tax-filing EIN, then each company should have its own complete and separate bookkeeping file.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.