Why Moving Money Between Accounts Is Not Income

Moving money from one account to another does not create new income.

For example, suppose you transfer $2,000 from your business checking account to your business savingsaccount. The business did not earn another $2,000. The same money simply moved to a different location.

If the transfer is mistakenly counted as income, your records may show that the business earned more thanit actually did.

Transfers commonly happen between:

• Business checking and savings accounts

• Two business bank accounts

• A business bank account and payment service

• A business checking account and business credit card

Credit card payments also need careful handling. Paying the credit card bill is not a new business expense if the individual purchases were already recorded. Otherwise, the same spending may be counted twice.

When reviewing bank activity, identify transfers clearly. Make sure the amount leaving one account matches the amount entering the other.

Correctly recording transfers helps your reports show real income and real spending instead of duplicated amounts.