I am new to manager.io, but it looks very promising.
I have 2 separate businesses, but they share one bank account.
Is it possible to share one bank account across businesses?
Any other options?
You cannot split a bank account between two businesses. A second bank account is the best solution but if one of the businesses has very few transactions then create loan accounts between the businesses. In the business that has the bank account any transaction relating to the other business can be entered to the loan account. In the business without the bank account the income and expense transactions can be entered as journal entries with corresponding debit/credits to the loan account from the other business.
Only one business can “own” the bank account. This is important because the balance in bank account is reported on balance sheet. If you have $10,000 in a bank account, you can’t have both businesses to report as if they have $10,000 in the bank.
So the solution is to decide which business is going to “own” the balance. Then create bank account under that business. You should also create a liability account in your Chart of Accounts such as “Loan - Business ABC” where Business ABC is the name of your second business. Any transaction that relates to the second business should be allocated to “Loan - Business ABC” liability account.
So that’s how you do bookkeeping for the first business that is going to “own” the bank account.
Now what about the second business? Well, if your first business is paying an expense from bank account on behalf of your second business, you should record this as an expense claim or journal entry.
If your first business is receiving money from customer to the bank account on behalf of your second business, you should record this as a journal entry.
Anyway, you will need to understand double-entry accounting principles in order to correctly account for these transactions. If you are not familiar with double-entry accounting principles, I suggest you have second bank account for the second business like Tony has suggested.
I understand about the bank account and the loans.
But the thing is: the 2 businesses share more information than only the bank account. They have also some shared costs (like telephone, internet, computer, car, …), some shared suppliers, some shared customers…
As the two businesses or divisions are targeted to different types of people and sell different products/services (a photography division and a division that sells stationary and cards etc…) the invoices need to look different (more different than just replacing the logo).
In my current book keeping, I do not have a good view on the difference of income generated by the two divisions.
Any suggestions on how to approach this type of division/multiple businesses?
For multi-division capabilities, see Guides | Manager
If you want one business to issue two different types of invoices, you should look into View Templates which allow to customize look & feel through HTML - see Guides | Manager
When having two different templates is there a way to have two different logo’s and business information?
Not by relying upon your entries under Settings. But you could hard program the changes in HTML. How to do that is beyond the scope of this forum.
what accounts do I use in the journal entry?
In the first business, which owns the bank account, you would post all transactions relating to the second business to an Inter-business Current Account which generally would be located in the BS Liabilities.
In the second business, it would replicate within its own Inter-business Current Account via Journal all transactions posted there in the first business. It is to be noted that if the first business puts a Debit to the Inter-business Current Account, then that same transaction is taken up as a Credit to the Inter-Business Current Account in the second business and vice versa
If the first business pays accounting fees on behalf of the second business then the entries are:
First Business - Spend Money
Credit - Bank Account
Debit - Inter-business Current Account
Second Business - Journal
Credit - Inter-business Current Account
Debit - Accounting Fees
Thank you Brucanna,
What do I do if the first business receives money on behalf of the second business?
e.g: A customer pays an invoice into first business account that was invoiced out by the second business.
First Business - Receive Money
Debit - Bank Account
Credit - Inter-business Current Account
Second Business - Journal
Debit - Inter-business Current Account
Credit - Accounts Receivable + Customer + Invoice
In the second business what would the Inter-business loan account be classed as?
It is not a loan account - it is an inter-business “Current Account”.
A current account is where transactions are allocated to when they belong to another entity.
In one business the current account will have a debit balance and in the other a credit balance, but depending on the transactions occurring, these balances might swap backwards and forwards over the course of a year.
However, if the balances are going to be roughly in the same direction (business one always Debit) then the Current Account in one business will be a BS Asset and in the other business a BS Liability
If you have two businesses ABC & XYZ, then in business ABC you would have XYZ Current Account or XYZ C/A. In Business XYZ you would have ABC C/A
Thank you!!! all sorted now 