Easy, every organization and every need is it’s own bank account if you don’t want accounting to be a nightmare
Like if you take money, it should go in accounts receivable. For expenses, accounts payable. And then you’ll want something for the pile of money before it’s transferred/sorted, maybe a few for money held aside for various reasons, maybe separate ones for payroll, services from vendors, and miscellaneous things like office supplies. Etc etc etc
The more money moving around the more seperating out the money flows makes sense. A dozen or two bank accounts for mid sized company is pretty reasonable. A big one might have a dozen per department
What is a bank account but a digital box to put numbers in anyways? It costs next to nothing per account, but clear delinitation of the money makes it a lot easier to make sure it’s going to the right place instead of being pocketed
Or alternatively, lots of accounts could make it very difficult to make sense of. But that kind of deliberate obsfucation might trigger some kind of anti money laundering alerts
I think you’re confusing an accounting tool, called double entry booking, for services offered by a bank. Every accounting software allows for tracking expenses and incomes in virtual ‘accounts’ that have little to do with the credit offered by banks. For example, ‘dry cleaning’ could be the name of an expense account, despite the dry cleaners not offering you an actual bank account.
Exactly. For example, I have a number of side hustles in addition to my work, and for other reasons, I have income, assets and expenses in two different countries. So I have over 100 virtual accounts in a multicurrency accounting package (for accounting geeks, that’s my chart of accounts). But in each country, I have only 2 or 3 bank accounts. You don’t need separate physical accounts, all you need is tagging. And my transaction volumes are low enough that I can spend an hour a week keeping my accounting package synchronized with the accounts. And I also use another instance of the same accounting package to do detailed financial forecasting a couple of years ahead, then correct forecast to actual as I go along.
Easy, every organization and every need is it’s own bank account if you don’t want accounting to be a nightmare
Like if you take money, it should go in accounts receivable. For expenses, accounts payable. And then you’ll want something for the pile of money before it’s transferred/sorted, maybe a few for money held aside for various reasons, maybe separate ones for payroll, services from vendors, and miscellaneous things like office supplies. Etc etc etc
The more money moving around the more seperating out the money flows makes sense. A dozen or two bank accounts for mid sized company is pretty reasonable. A big one might have a dozen per department
What is a bank account but a digital box to put numbers in anyways? It costs next to nothing per account, but clear delinitation of the money makes it a lot easier to make sure it’s going to the right place instead of being pocketed
Or alternatively, lots of accounts could make it very difficult to make sense of. But that kind of deliberate obsfucation might trigger some kind of anti money laundering alerts
I think you’re confusing an accounting tool, called double entry booking, for services offered by a bank. Every accounting software allows for tracking expenses and incomes in virtual ‘accounts’ that have little to do with the credit offered by banks. For example, ‘dry cleaning’ could be the name of an expense account, despite the dry cleaners not offering you an actual bank account.
Exactly. For example, I have a number of side hustles in addition to my work, and for other reasons, I have income, assets and expenses in two different countries. So I have over 100 virtual accounts in a multicurrency accounting package (for accounting geeks, that’s my chart of accounts). But in each country, I have only 2 or 3 bank accounts. You don’t need separate physical accounts, all you need is tagging. And my transaction volumes are low enough that I can spend an hour a week keeping my accounting package synchronized with the accounts. And I also use another instance of the same accounting package to do detailed financial forecasting a couple of years ahead, then correct forecast to actual as I go along.
It also makes doing taxes really simple.