How to Manage Bookkeeping for Multiple Businesses
Owning more than one business can mean more opportunities - but it also means more financial records, accounts, expenses, and transactions to keep straight.
The key to managing bookkeeping for multiple businesses is keeping the financial activity of each business separate and organized. Separate records make it easier to understand how each business is performing, reconcile accounts accurately, prepare for tax time, and make informed financial decisions.
If you own multiple businesses, here are some practical ways to keep your bookkeeping organized.
Keep Separate Books for Each Business
Each business should have its own bookkeeping records rather than combining the income and expenses of multiple businesses into one set of books.
Even when businesses have the same owner, keeping clear records for each one helps you understand where money is coming from, where it is going, and how each business is actually performing.
If you use accounting software such as QuickBooks Online, you will generally want each separate business entity to have its own company file or subscription rather than combining multiple businesses into one set of books.
Use Separate Bank Accounts and Credit Cards
Use dedicated business bank accounts and credit cards for each business whenever possible.
For example, income earned by Business A should be deposited into Business A's bank account, and its expenses should generally be paid from that account or its dedicated credit card.
Keeping accounts separate makes bookkeeping much easier because there is less guesswork about which transactions belong to which business - and less time spent backtracking to figure it out later.
Avoid Paying One Business's Expenses From Another Business's Account
If Business A has a software bill, try not to pay it from Business B's bank account.
It may seem harmless when you own both businesses, but those transactions still need to be accounted for correctly. Depending on how the businesses are structured and the circumstances of the transaction, the payment may need to be recorded as a contribution, distribution, loan, reimbursement, or another type of transaction.
Keeping payments with the correct business from the beginning helps avoid unnecessary bookkeeping cleanup later.
Track Shared Expenses Carefully
Some expenses may benefit more than one business. You might share office space, software, equipment, or other costs between businesses.
When that happens, keep documentation showing how the expense was divided and why. Using a reasonable and consistent method for allocating shared expenses helps keep each business's financial reports accurate.
If you're unsure how a shared expense should be allocated or treated for tax purposes, check with your accountant or tax professional.
Reconcile Each Business Separately
Each business's bank accounts and credit cards should be reconciled regularly against its bookkeeping records.
Reconciliation helps identify missing transactions, duplicate entries, incorrect amounts, and transactions recorded to the wrong account or business.
For multiple businesses, a consistent monthly reconciliation process can also help catch accidental crossover between businesses before it becomes a larger cleanup project.
Review Financial Reports for Each Business
Review the financial reports for each business individually rather than relying only on a combined view of everything you own.
At minimum, reviewing each business's profit and loss statement and balance sheet can help you see its income, expenses, profitability, assets, and liabilities.
One business may be growing while another is struggling with expenses or cash flow. Looking at each business separately gives you the clarity to see those differences and make better decisions.
Can You Manage Multiple Businesses in One QuickBooks Account?
If your businesses are separate entities (and they should be), they generally should not be combined into a single QuickBooks Online company file. Each business should have its own records, and separate QuickBooks Online companies generally require separate subscriptions.
However, the best setup can depend on your business structure. For example, separate business activities operating under one legal entity may be handled differently than two completely separate LLCs or corporations.
When you're unsure, your bookkeeper and tax professional can help determine the right setup for your situation.
A Little Separation Makes Multiple Businesses Easier to Manage
Managing multiple businesses doesn't have to mean managing messy books - or spending your time sorting them out.
Separate accounts, clear records, regular reconciliations, and individual financial reports give you a much clearer picture of what is happening in each business. And when the books are organized, there is less guesswork when it's time to make financial decisions.
Need help keeping the bookkeeping organized across one or multiple businesses?
Book a call to learn more about how Meticulous Bookkeeping can help.
Comments