If I have two businesses, is it possible to transfer funds from the bank account of one business to another?
Yes, Spend Money in the 1st Business with the contra going to an Intercompany Current Account in the name of the 2nd business. Then Receive Money in the 2nd Business with the contra going to an Intercompany Current Account in the name of the 1st business.
Thanks for your advice Brucanna, I am interested in this concept too and wonder if you could flesh this explanation out a little more. I am assuming that one primary bank account is in play, but don’t understand what you mean by the words “contra going” and “Intercompany Current Account” ? Are you using the word Conta to mean “amount of money”? Is the Intercompany Current Account something that is already in Manager (a GL account) or is this something that needs to be created or assigned?
This is something that Brucanna needs to work on as I have had the same problem sometimes understanding what he is saying because he uses a lot of accounting terminology and I don’t always know the terminology.
What he means is go to bank spend and allocate £1000 and select say Company B Current Account as the contra account. Then in the second business go to bank receive and receive £1000 and select Company A Current Account as the Contra Account. Naturally you would need to create the contra accounts.
However, I don’t like this approach as it might get confusing how much money you actually have in your bank accounts if the Contra Accounts are Current Accounts. I would rather do a bank spend - Company Loan in Company A and Bank Receive - Company Loan in Company B because the companies are two legally separate entities so to me its more like a loan than a bank transfer.
To know how much money you actually have - you would only refer to your actual bank accounts not other asset or liability accounts. A loan balance to either another business or bank doesn’t change your actual cash.
Calling them loan accounts maybe suitable if its only money transactions but generally between business with the same ownership there are other transactions which would pass through the intercompany current account.
Shared expenses (administration, Insurance, rent, rates, etc) could be paid by one business with the other business’s share being posted to the intercompany current account. Any funds transferred between the businesses could then be the repayment for these chargers