Atoms are the smallest unit of matter.
Cells are the smallest unit of life.
Transactions are the smallest unit of accounting.
An accounting transaction is usually money in or money out.
There are three types of transactions:
Accounts contains transactions.
There are two types of checking/credit accounts:
Business checking and business credit accounts
Personal checking and personal credit accounts
Business transactions should run through business checking and business credit accounts.
Personal and mixed transactions should run through personal checking and personal credit accounts.
To help ensure your experience at Collective (and beyond) is successful, check out the following examples of transactions. All the nuances are not covered here, but this is a good place to start!
Below are examples of expenses that should be paid from business accounts:
Software required for your work
Legal and professional fees such as Collective
Meals with a business associate (for more info on business meals, see here)
Airfare, Hotels, Car Rentals
Job Supplies and Office Expenses
Health, Dental, Vision Insurance Premiums
For more examples of common business expenses, click here. The full chart of accounts used by Collective can be found here.
Below are examples of expenses that should be paid from personal accounts.
Charitable contributions (non-advertising)
Most food / meals (for business meals, see here)
Direct auto expenses (gas, car payments, repairs, etc.)
Federal and state income tax payments (including quarterly estimated taxes)
All client entertainment that does not involve food
Most subscriptions like netflix, hulu, youtube, spotify, ny times, etc.
Exceptions are discussed here
The mixed expenses below should be paid from personal accounts (and then the company will claim a percentage of these expenses via the accountable plan).
Home Office Deduction (Rent, Utilities, etc.)
See here for more info on mixed expenses.