As a small business owner, you might start off using your personal accounts in your business. Naturally, you add these to your Quickbooks Online. However, this can lead to a number of problems down the road. In this blog post, we’ll take a look at why it’s a bad idea to add personal bank and credit card accounts to your Quickbooks Online account.
Mixing personal and business transactions
The biggest problem with adding personal bank and credit card accounts to your Quickbooks Online account is that it can lead to a mix of personal and business transactions. When you’re running a business, it’s important to keep your personal and business finances separate. If you add personal accounts to your Quickbooks Online account, you could accidentally categorize personal transactions as business expenses or vice versa. This can make it difficult to track your business finances accurately and can cause issues during tax season.
For example, let’s say you use your personal credit card to purchase office supplies for your home. If you’ve added your personal credit card to your Quickbooks Online account, you might accidentally categorize that purchase as a business expense. This can lead to inaccurate financial records and could result in a higher tax bill.
Security risks
Another problem with adding personal bank and credit card accounts to your Quickbooks Online account is the security risk. When you add personal accounts to your Quickbooks Online account, you provide sensitive financial information to whoever is also a user, information they simply don’t need. If your Quickbooks Online account is hacked (a rare occurrence, but it could still happen), cybercriminals could potentially gain access to your personal financial information, putting you at risk of identity theft and fraud.
Confusing financial records
Adding personal bank and credit card accounts to your Quickbooks Online account can also lead to confusing financial records. If you’re not diligent about separating personal and business transactions, you could have a messy financial record that’s difficult to decipher. This can make it difficult to make informed business decisions and could cause problems down the road if you need to apply for a loan or sell your business.
Compliance issues
Finally, adding personal bank and credit card accounts to your Quickbooks Online account can cause compliance issues. Depending on your business structure, you may be required to keep separate financial records for personal and business expenses. By mixing personal and business expenses in your Quickbooks Online account, you could be violating compliance regulations and facing audits and penalties as a result.
In conclusion, it’s a bad idea to add personal bank and credit card accounts to your Quickbooks Online account. Doing so can mix personal and business transactions, security risks, confusing financial records, and compliance issues. To avoid these problems, it’s important to keep your personal and business finances separate and only add business accounts to your Quickbooks Online account.
