Navigating Client Co-Mingling Issues in QuickBooks: A Beginner’s Dilemma

Recently, I found myself stepping into the world of QuickBooks after being approached by a friend whose assistant/bookkeeper had retired. With over a decade of keeping financial records manually, they sought assistance in transitioning to this robust Accounting Software. Intrigued, I decided to jump in and help, but it quickly became clear that I was grappling with a complicated situation.

The client in question, Liz, has been financing significant personal expenses using her business account. These include regular bills such as her mortgage, utility payments, IRA contributions, gym memberships, and cable services. In the past, records of these transactions were maintained through a handwritten ledger, a method that appears to have led to some confusion.

As I delved into QuickBooks, the extent of the co-mingling became apparent. A typical month’s transactions included payments like:

• Bob’s Pest Control: $1,000
• Jill’s Fertilizing: $600
• Insurance Company (Home & Auto): $3,000
• Ed’s Nursery: $2,000
• Chase Bank (Mortgage): $3,500
• Comcast: $200
• AT&T: $200
• SIMPLE IRA: $4,000

While the expenses related to pest control, fertilizer, and nursery supplies clearly relate to the gardening and landscaping business, the payments for the mortgage, cable, phone, and even personal insurance raise red flags regarding co-mingling funds.

On top of this, when I inquired whether the SIMPLE IRA contribution was made by the company, I learned from the retiring administrator that it was Liz’s personal contribution—again drawn from the business funds.

This left me pondering the best course of action. My options seemed limited; I could request that Liz untangle her finances, but that felt overly demanding, especially given their long-standing method of recording transactions.

My instinct was to categorize these personal expenditures as an “Owner Draw” in QuickBooks, but before proceeding, I find myself questioning the implications. Am I being overly cautious? Or is this a genuine issue that requires addressing to ensure accurate Accounting?

The challenge lies not only in reconciling these transactions in QuickBooks but also in bridging the communication gap with Liz and her team. They seem perplexed and somewhat irritated by my