Navigating Client Co-Mingling Issues in QuickBooks: A Guide for New Bookkeepers

Taking on a Bookkeeping responsibility for a client can be a daunting task, especially when transitioning from handwritten records to a sophisticated Accounting Software like QuickBooks. In my recent experience, I encountered a significant challenge that many bookkeepers may face – the issue of co-mingled personal and business expenses.

A friend reached out to me for assistance after their long-time bookkeeper retired. With their business having relied on a manual ledger for a decade, stepping into the digital realm felt overwhelming. Despite my eagerness to learn QuickBooks, I quickly discovered complexities that required careful navigation.

The Co-Mingling Conundrum

The client, who operates a gardening and landscaping business, had been using the business account to pay for a range of expenses – some of which were distinctly personal. The list was concerning: mortgage payments, utility bills, gym memberships, and even contributions to an IRA, alongside legitimate business outlays such as pest control services and nursery supplies.

For context, here’s a sample of the expenses recorded:

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

As I began importing transactions into QuickBooks, it became clear that the mixing of personal and business expenses presented a significant Accounting issue. While the expenditures related to pest control and fertilizers could be deemed necessary for the business, payments like the mortgage and utility bills signified a potential breach of best practices.

The Challenge of Communication

In my attempts to discuss these co-mingled transactions with the previous bookkeeper and the client, I encountered confusion and annoyance. They were accustomed to a more casual method of record-keeping and seemed disconnected from the need for proper categorization in QuickBooks. This resistance made it challenging to address the issue without creating friction.

Practical Solutions for QuickBooks Management

Confronted with this dilemma, I contemplated my next steps. One potential approach is to categorize all personal expenses as “Owner Draw” in QuickBooks