Transfer Between Own Accounts: How to Record It Properly

A transfer between two accounts you own (current account to savings, current account to the business credit card) is neither income nor an expense. In the books, a transfer between own accounts is recorded as money leaving one account and arriving in the other, with no effect on profit. Get it wrong and you either inflate your costs or double count your income, and both mess up your reports in ways that are surprisingly hard to spot.

The mistake that makes a good month look bad

Oliver runs a small IT support business in Manchester. He's careful. He tucks money aside each month for his tax bill and for a rainy day. In Sep 2026 he moved £4,000 from his business current account into the business savings account.

His bank feed brought in "TFR TO 30-91-22 81234567 SAVINGS" for £4,000. He was in a hurry and it got categorised as "General expenses".

His profit and loss for Sep 2026 said he made £1,850. In reality he made £5,850. He spent a jittery fortnight wondering where his margin had gone before his bookkeeper spotted it.

Nothing was lost. The money was sitting in savings the whole time. But his books told the wrong story.

What counts as a transfer?

Anything that moves money between accounts the business owns. Common ones:

• Current account to savings account, and back
• Current account to a business credit card (paying off the card)
• Between two current accounts at different banks
• Moving money from a payment processor balance to your bank, if you track the processor as its own account
• Paying cash takings into the bank, if you track a cash or petty cash account

What isn't a transfer, even though it looks like one:

• Moving money from the business to your personal account (that's drawings, or the director's loan account for company directors, or salary/dividends)
• Paying a supplier, even if the description just says "TFR"
• A customer paying you by bank transfer (that's income, or a payment against an invoice)

The test is simple: are both ends of the movement accounts that belong to this business? If yes, it's a transfer.

How a transfer should look in your books

A transfer has two sides, and both accounts need to show it.

Net effect on the business: zero. Net effect on profit: zero. The total cash the business has is the same; it's just in a different pot.

When you have bank feeds on both accounts, you'll see both halves arrive: £4,000 out of the current account and £4,000 into savings. The key is to treat them as the same movement, linked together, rather than as one expense and one bit of income.

Credit card repayments: the double-count trap

Paying off a business credit card is the transfer that catches people most.

Let's say Oliver's business card statement for Sep 2026 shows:

Check: £96.00 + £68.40 + £312.75 + £119.00 + £49.99 = £646.14.

On 5 Oct 2026, he pays the card off in full from the current account: £646.14.

The right way to record this:

• Each of the five card purchases is categorised as its real expense (hosting, travel, parts and so on) on the credit card account.
• The £646.14 payment from the current account is a transfer to the credit card account. It reduces the current account and reduces what's owed on the card.

The wrong way is to categorise the £646.14 repayment as "Credit card expenses" as well as categorising the five purchases. That counts £646.14 of costs twice, so Oliver's expenses would look £646.14 higher than they really are.

If you don't track the card as its own account at all, then the repayment is the only record of those costs, and you'd need to split it across the right categories. It works, but you lose the detail and the dates. Tracking the card separately is much cleaner.

Money in transit at month end

Transfers between different banks don't always land the same day. Say Oliver moves £1,500 from his main bank to a second business account at another bank on 30 Sep 2026, and it arrives on 1 Oct 2026.

At 30 Sep 2026:

• The first account has already sent the £1,500.
• The second account hasn't received it yet.

If you look at both bank balances on 30 Sep 2026, the business seems £1,500 poorer than it is. The money is in transit. This is normal, and your books should show it as a transfer that left on 30 Sep 2026 and arrived on 1 Oct 2026. Some bookkeepers use a small "transfers in transit" account to hold it for the gap. Either way, when you reconcile each account, each bank statement should agree with its own side of the books for that date.

A quick checklist for transfers

• [ ] Every transfer has both halves recorded, one on each account
• [ ] No transfer is categorised as income or as an expense
• [ ] Credit card purchases are categorised on the card account; repayments are transfers
• [ ] Money to your personal account is treated as drawings or director's loan, not a transfer
• [ ] Transfers spanning a month end are checked against both statements
• [ ] Each account reconciles to its own statement at month end

Spotting transfers in a bank feed

Bank descriptions for transfers vary a lot. Watch for:

• "TFR", "TRANSFER", "FT", "INTERNAL"
• A sort code and account number in the description
• Round numbers (£500, £1,000, £4,000) on the same day in two of your accounts
• The card provider's name on a payment out of the current account

When in doubt, look at both accounts for the same date and amount. If they pair up, it's a transfer.

How HelloBooks helps

In HelloBooks you can connect each of your business accounts and cards through Open Banking (most UK banks and cards). The Free plan includes one live bank feed, and you can import CSV statements for other accounts. Pro (£14.99 a month) gives you unlimited bank connections, so savings and card accounts can all feed in.

Transactions land in a review list where you confirm or change the category, so a transfer can be set straight before it touches your reports. Credit-card accounts reconcile the same way as bank accounts: the reconcile screen lines your statement up against your ledger, suggests a match for each line with a confidence score and its reasoning, and leaves you with only the exceptions. There's more on the bank reconciliation software page, and if you want to see how cash moves between accounts over time, take a look at cash flow management.

FAQs

Is a transfer to savings an expense?

No. It's money moving between two accounts the business owns. It doesn't change your profit.

How do I record paying off the business credit card?

Record the individual card purchases as expenses on the credit card account. The payment from your current account is a transfer to the card, not another expense.

What if a transfer leaves one account on the last day of the month and arrives the next day?

That's money in transit. Record it on the dates each bank shows. Each account should still reconcile to its own statement.

Is moving money to my personal account a transfer?

Not for bookkeeping purposes. For a sole trader it's drawings; for a company director it usually goes through the director's loan account unless it's salary or a dividend. Your accountant can confirm.

Why does my profit look too low?

A common reason is a transfer to savings or a credit card repayment categorised as an expense. Check the larger round-number payments first.

Treat every transfer as one movement with two ends, and your profit figure will stop playing tricks on you.

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