Accounting

Transitioning personal accounts to corporate accounts

Chris Hartman Experienced Product Development Consultant

December 29th, 2013

I suspect this is a situation faced by many bootstrapped startups, so I hope this forum has some insights.

You start working on your idea and open several accounts to support it along the way. Think, AWS, Twilio, PivotalTracker, Sendgrid etc.. Of course, all of these accounts are on your personal card and in your name. Then you incorporate as Company A, and open a bank account for Company A, but all of the previous accounts are still there and charging your personal account.

With the understanding that you don't want to co-mingle any of your personal accounts with corporate operations, what is the recommended way to clear the slate so to speak so that your newly formed company is cleanly broken off from its pre-incorporated past? 

Can this be handled just by having the corporation pay back the founding team/account holders using an expense process? Or is there a better strategy/process for making this transition?
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Chhean Saur

December 29th, 2013

I would just expense the purchases against the company if they were paid from personal accounts. And then the business just reimburses you for any relevant transactions. But be sure to save or scan your receipts and keep an accurate document/spreadsheet of all the business transactions as well. You really need to maintain clear documentation of business transactions as opposed to non-related personal expenditures. So having separate business bank accounts or corporate credit cards certainly makes that easier, but it's not really that difficult to keep a spreadsheet and maintain documentation of the associated transactions (i.e. keep or scan the receipts). 
Of course there are accounting tools to help with this like quickbooks as well as many others.

Anthony Zeoli Digital Strategy and WordPress Consultant and Trainer

December 29th, 2013

I agree with Chhean Saur.

Simply submit your past receipts for payments to the company for reimbursement and then the company writes those off as an expense. As he said, make sure that your books for the business recognize this as an Employee Reimbursement and that all receipts are submitted to the company. You should definitely clear this with your partners if there is anything in your corporate structure that says partners have to agree on expenditures. If you have no partners, then you're free to reimburse yourself, but remember that down the road, all expenses in the event of a transaction are going to be scrutinized by an investor and that any expense you reimburse yourself for must not be considered embezzling money out of the company without prior authorization as the corporate structure provides. I'm not an attorney, so this is not legal advice.

Vijay MD Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)

January 6th, 2014

I've kept the receipts and transactions for this on expensify -- if you've got invoices/ receipts and send yourself a formal expense report (with receipts in one place) it can save you headaches later. 

Jake Carlson Software Development Manager at Oracle

December 29th, 2013

Yes clear the slate for the beginning of the year. Ultimately, you as owner decide what to spend your money on. Nobody can tell your company not to reimburse you (as an individual). You can also run your company into the ground buying pixy stix. That's your prerogative.

Mark Temperley ex-X Commerce finance, ex-management consultant

May 22nd, 2017

Agree with the others. Pay and claim it back, but as the company gets bigger move to a corporate account