Keeping your Business Separate…Editor
Life can be a juggling act. Running a business adds another ball into life’s mix. The long hours, the responsibility, finding family and personal time, and of course…the finances. In the beginning phase of your business, it may be tempting to keep your money in your personal account. I encourage you to resist and keep them separate.
Perhaps you used personal assets/finances for your business startup. Many do. And while it may seem simpler to keep everything in one account, it’s the polar opposite. Keep your business and personal accounts separate. This is crucial to gauging profits, paying expenses (and yourself), taxes, and to keep yourself from embezzling from your business. And as you grow, you’ll likely have someone handling your financial matters for you. It’s better not to give them access to your personal accounts.
Shop around for financial institutions that offer good programs for small businesses. Start at the bank where you already do business. Utilizing the same banking facility will ease the process of making transfers from one bank account to another. Be sure your business account has your company name on it to keep it a separate entity and to ease the process of applying for business loans among other things. Ask your banker lots of questions to see what services/programs they offer that will benefit you and your business.
The same advice stands for credit cards. You definitely want to keep a designated credit card for your business. Interest from many of the expenses you will incur for your business will be tax deductible. Trying to separate them on your personal credit card at the end of the tax year is a bookkeeping nightmare for you and/or your accountant. Again, shop around for a card with minimal fees, low interest, and even rewards programs.
As important as keeping your money in a separate account is, keeping records and receipts in a separate place is equally important. Should there come a time where the IRS comes knocking to do an audit (and for the sake of your end of year tax filing), you will have everything you need at your fingertips instead of having to root through your house records in the process. Check the IRS website to see what records you should keep and for how long.
Organization is key to running a successful business. If “organized” isn’t the first word that you would use when describing yourself, find someone to help you set up some systems that will be easy to keep up with. After all, we can’t all be good at everything. Know and work from your strengths and let others do the same to help your business be the success story you’re dreaming of!