CPA Denton CFO AlternativeEach company on its own bank

Why the mix feels efficient and is not

Owners mix companies because the work feels like one life. The truck is paid from whichever account has cash. A vendor for the second company gets a card from the first. For a few months nobody is hurt. Then a banker asks which company earned the profit, and the answer is a spreadsheet with colors.

We keep the companies visible. Transfers are transfers. A bill paid for the other company is a due to or a due from, not an expense that quietly changes the margin. The month does not close until those crossings are named.

Since 1905 the municipal utility has kept the lights on, a civic fact neighbors share without a speech. The power bill remains a vendor invoice for the company that used the power. It does not become a shared cost just because both companies sit in the same town.

What you can see when they stay apart

Apart, you can tell which company can pay its own payroll and which one is borrowing morale from its sibling. Apart, a sale of one company does not require an archaeology project. Apart, the return for each entity starts from a year of closes instead of a reconstruction.

If a company has no activity, we still want the bank and the franchise report to agree that it was quiet. Quiet is a fact. Missing is not the same fact.

Software will let you run both companies in one file. That can be fine if the file keeps them in separate books. A single undifferentiated bank feed is how the story starts. We would rather set the file up so the separation is boring and permanent.

A change in how a company is taxed

Visibility is not the same question as how a company is taxed. An LLC can be taxed in more than one way, and that choice is a filing with a date. We talk about the filing on its own page. Here the point is smaller. Even the right tax choice is unreadable if the bank accounts are braided together.

Bring the company names and the banks. We will say which crossings we can see from the feed and which ones need you to remember a Saturday.

A buyer who wants only one of them

A buyer sometimes wants the shop and not the rental company, or the crew and not the equipment company. The question arrives by text on a Sunday. If the fuel, the card, and the vendor payments have been braided all year, Sunday is too late to invent the split. The crossings should already be named, month by month, as ordinary lines.

A quiet company still files. No sales is a fact the bank and the state report can both show. We would rather write quiet on purpose than leave a year with no close and call the silence proof of nothing. Missing pages and a true zero are different stories, and a buyer can tell them apart.

One memory only you have is the Saturday a vendor was paid because that account had the cash. Write it down while you remember the vendor's name. A color legend in a spreadsheet will not survive the buyer's questions. A line that says which company owed which company will.

You, a banker, and a buyer should be able to point at one company and see its own cash without a tour of the other. If the answer needs a legend, the month is not finished, and the sale conversation should wait.

Name the company the buyer wants on the cover, and leave the other company's cash off that page entirely.