Transfers between two budgets - business and personal

How do I track transfers between my business and personal accounts when they are all at the same bank and I have two separate budgets?

For example, I budget  for "paying myself" with transfers from a business to a personal account. Should I:

  1. set up the personal account as a tracking account on my business budget?
  2. With direct download?
  3. And budget categories for those transfers? 

Likewise, should I do those same things in my personal budget?

Thanks in advance!

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  • I had to do this for my wife's side business.   This setup worked well for me:

    1. Separate Budgets
    2. Only add the personal account in the personal budget and only the business account with the business budget. 
    3. Whenever I do a 'transfer' I make a categorized transaction, just like if I bought something or paid a bill, in the one account and then create a corresponding Inflow in the other under To Be Budgeted. Then I move money to the category it needs to go just as if I am budgeting for the month.
    4. I have a category in the personal and business account that complement each other. Personal Account has Business Loan and the Business Account has "Personal Payback".  Oh, and for income from business I actually have a payday budget as well.  These are the categories I use when making the 'transfer' between accounts.  

     

    Some general comments I have.
    For #2, I don't think it matters if they are in the same bank or not.  I've never used automatic imports though, so maybe your mileage will vary there? Also you aren't going to easily get the total numbers across accounts this way, but in my opinion that is OK because the business money is not personal money and doesn't count for my personal wealth and vice versa. If it has crossed budgets then it has changed purposes, completely, so I am OK with that caveat.

    For #3, YNAB reporting doesn't do what I want in the reporting when I do an inflow with a category.  It will screw up the average and total spent for that category because by design it takes inflows as if they were a refund not as income. That is why I always do the credit toward To Be Budgeted first. 

    For #4 these categories have worked very well for me because I know I have the funding to make the transfers and still have my other categories funded.  As long as my To Be Budgeted amount is never 0 I'm good.  My tip is to always move money by clicking the amount in 'To Be Budget' or the category line, in that way you won't accidentally spend from the future. If you need to track transfers and better reports at a finer grain between accounts I'll have to admit that YNAB isn't the right tool for that job and may need another program to keep track of what you want.

    Like 1
  • I have two budgets. My personal budget and a budget for a rental property that I own. In the rental budget, I have a category called owner draw. This is where I allocate any rent money that isn't covering the mortgage, property manager fees, or the $200/month I allocate to maintenance.

    I opened an online checking account that pays the mortgage and where the rent goes. At the same online bank, I have a savings account. Once the rent money clears and I allocate to the owner draw category, I transfer the owner draw to the savings account in real life. In YNAB, I enter it as an outgoing transaction and just use my savings account nickname as the Payee. It is money leaving the business budget.

    I then flip over to my personal budget. The savings account is one of my many on budget accounts. I record a transaction there with Payee "Rental Income" and the money is available to be budgeted and I budget it to whatever category I choose. So far, I haven't moved any of the funds out of this savings accounts to one of my other on budget accounts because location and purpose of funds are completely separated in my mind so I don't need the money to be in a checking account to "spend" it, I just need it to be in a category.

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  • Thanks so much for these detailed answers James  and AJEE

    I goofed and should have said that I am using direct download from the bank.

    If you put any bank account in Tracking, and then try to transfer to it and categorize it, it is indeed possible. YNAB Support people confirmed in an email to me that:

    • If you transfer between budget accounts, you don’t categorize. Even if you try, YNAB won’t let you.
    • If you transfer from a budget account to a tracking account, you do categorize. YNAB will let you do this.

    Now, if you reread my original question, you will see why I am struggling with this.  It is a complicated question, but we business people using direct download need answers.

    Sole proprietorships do a lot of transferring between bank accounts and between budgets. Unfortunately, Bank of America does not specify in the payee field which account the transfer is going into. Unless YNAB automatically matches the transfers between budgets to the correct bank account, you have to go to your bank website to find out where the transfer originated and was headed. Then you have to label each transaction in the way you both have brilliantly figured out.

    Bottom line: I need a tutorial on bank transfers between budgets using direct download. Sorry I didn't state this in my original question. I was just assuming that everyone direct downloads, but I know that YNAB4 didn't allow it.

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  • OK, I am answering my own question after doing some testing.

    Putting accounts from other budgets in Tracking just creates a huge complication as all the transactions will download, uncategorized. The bank will not identify which account you transferred into. You would have to manage the tracked account with all its downloading in both budgets.

    So there are two ways to handle this:

    1. Manually enter the transfer twice, once in each budget. Then match the transfer when it is downloaded in both budgets.

    2. Combine business and personal budgets so transfers will be automatically matched, whether you enter them manually or wait for the download.

    This is such a pain in the neck that I am seriously considering combining business and personal budgets, just so I can work smoothly and accurately with account transfers and the matching downloaded transactions.

    I would still like feedback on this in case anyone has any better solutions!

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      • James
      • beeblebrox
      • 3 yrs ago
      • Reported - view

      Granny Bogle Since my wife isn't doing much with her side business at the moment  I currently have things in one budget, but she has literally only 2 categories at the moment.  If she had more that option would not work because I would have a hard time spiting things up come tax time via the reports.

      Honestly, I don't think YNAB is a good choice if you want to manage business and personal under one budget and be able to track everything well.  Heck, even if you do keep the business budget in it's own budget it is hard if you need to track things like tracking pending invoices and payments.  I honestly don't know how the YNAB founder wrangle's his business and keeps things organized for tax time in nYNAB, I've heard stories of various success doing what you want though, but I don't have any more advice on how to make it work better.  It was a little easier in YNAB 4 but you didn't have bank imports.  I love YNAB, but you may want to consider using different software accounting solutions to track the business side.

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  • I have one budget, with separate category groups, one for business expenses.  Have two separate bank accounts, one for personal and one for business and keep them both on my one budget.  Tried separate budgets but it got too complicated doing the transfers and keeping them straight.  I make sure personal income and expenses go through personal account, same for business.  Some expenses don't fit into either personal or business accounts.  I just fit them in and at the end of the year separate between personal and business expenses.  This is mostly things like monthly bills and annual expenses.  My business is a sole proprietor business so this works as taxes are done all at the same time, with a few extra pages for my business income and expenses.  Believe this would work for you also.

    I keep set, predetermined, amounts I want to keep in both my personal and business accounts. This is enough to cover a few months worth of expenses for both my personal life and my business.  Everything else gets swept into a separate savings account.

    Like 1
  • Thanks, James   I, too, have a sole proprietorship and just one tax return. I don't have to do invoicing, inventory, etc. so my business bookkeeping is fairly simple.

    It is interesting to me that transfers are so tricky that this is the main reason to combine business and personal. TryingToGetAhead your system feels right to me and thanks for the details. It reminds me of my old Quicken Home and Business budget...worked great. I like how you set up your buffer.  It will take work to combine the two budgets, but it is only January, luckily. I think I will feel a lot better knowing that transfers are matching correctly, especially since I use direct download.

    Like 1
  • I am a former YNAB4 fan who finally yielded to nYNAB. Like Granny Bogle I have had 2 accounts to keep separate but related with transfers, one business and one personal. I use two budgets. Transfers are a problem, at least partly because I seem to have linked one account up to an incorrectly named non-existent account, so transfers into it go into a hole, not into the register of the intended recipient. 

    Now I have acquired a second business and really don't know how to handle this. Granny Bogle if you are "still workin'" I am thinking you may be able  help me figure out how to set this up. If I can't get help from a fellow YNABBER I'll have to give up and let my bookkeeper switch me over to QuickBooks. That would make her happy, but I would lose the more concrete grasp of my finances that I have by using YNAB.

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  • Hi @sidneymueller

    You're not an. NEMC  cellist, are you? 

    Back on topic;... 

    I went back and forth between QB Online and  nYNAB.  Landed on nYNAB and will never look back! The only barrier was the  transfers. I took advice from the members who said, record the transaction as a regular transaction in the 2 accounts in .separate Business and Personal budgets. Assign a flag for the 2 transfers, such as yellow. When it downloads into one account, edit, approve, then find the matching flagged transaction in the other account. Be sure to erase any pre-entered number and replace it with the downloaded number.  I'm so used to it now, I don't even give it a thought. Most transfers can be automated using recurring transactions. Also, no offline accounts because transfers between offline and online accounts are very complex and confusing. Also, pay yourself once a month = only one transfer. 

    Cheers! 

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  • Hi Granny Bogle,

     

    I am not a cellist. I am a painter though, and a psychotherapist. In CA.

    I left Quicken for YNAB, got to 4 and never wanted to leave. But did switch to nYNAB, only to discover that they put what used to be called the check number in front of the Payee in the download. I  hate that, and I still laboriously change each one, successfully training some payees to use the straightforward company name. I put the form of payment data in the memo box. 

    I have never confessed that to anyone before now.

    I love your advice on transfers. I have to admit however that I can't implement it until I can get the Payments/Transfer dropdown to show the right name of the accounts I want to transfer to or from. Somehow I set it up once, but inadvertently used the wrong account name, and now the transfers into that place are not to a real account at all, just a made-up place that YNAB made. Now I can't remember how I did it, and the help is not helpful; it assumes I know more than I do, at a more fundamental level. I hope I have explained what my problem is. It's hard to describe.

     

    SidneyMullen

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  • Hi Sidney

    It's OK you can confess to me because I'm a psychotherapist too. I do think I'm following you. Your workaround is the same as mine. YNAB told me they can't strip unwanted characters from those downloaded transactions. 

    I also share your account name struggle. It is worth going to All Accounts and searching for all your transfers to a different budget and renaming the Payee to the account name you use in the other budget. Otherwise it will be a mess at tax time. 

    I'll stop there. Does that address both issues? 

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