When you’re first starting your own business, it can be difficult to keep your personal finances and your business finances separate. You may be tempted to just use one bank account for everything, but this is a big mistake.
When your business and personal finances are mixed together, it becomes very difficult to track where your money is going and how it is being spent. This can lead to all sorts of financial problems, including missed tax payments, overdrafts, and even bankruptcy. To help you, here are some tips for keeping your finances separate.
1. Have a dedicated business bank account and credit card.
One of the easiest ways to keep your finances separate is to have a dedicated business bank account and credit card. This way, all of your business income and expenses will be in one place and it will be much easier to track. You can also set up a separate account for business taxes so that you don’t mix them up with your personal taxes.
2. Keep good records.
Another important thing to do is to keep good records of all your business income and expenses. This will not only help you keep track of your finances, but it will also be very helpful come tax time. You should keep records of all receipts, invoices, and bank statements. Try to do this on a monthly basis so that it doesn’t become too overwhelming.
3. Get a business credit card.
A business credit card can be very helpful in keeping your finances separate. This is because you can use it to make all of your business purchases and then just pay the bill at the end of the month. This will help you keep track of your expenses and it can also help you build up your business credit.
4. Hire an accountant.
If you’re really struggling to keep your finances separate, you may want to consider hiring an accountant. They can help you set up a system that works for your business and they will also be able to help you with any tax-related issues. A financial advisor can also be helpful for your personal finances as they can help you create a budget for anything from mortgages to credit cards.
5. Use accounting software.
If you find it difficult to keep track of your finances manually, then you may try using accounting software. There are a number of different accounting software programs that can be very helpful in keeping your finances separate. This type of software can help you track your income and expenses, as well as manage your invoices and receivables. This can be a great way to keep everything organized and in one place.
6. Make sure you have insurance.
Another important thing to do is to make sure you have the proper insurance for your business. This includes things like liability insurance and property insurance. This will help protect you financially if something goes wrong. Your personal finances should also be insured, so make sure you have things like health insurance and life insurance.
7. Have a separate business phone line.
Another good way to keep your finances separate is to have a separate business phone line. A business phone line can be very helpful in many ways. First, it can help you keep track of business calls and expenses. Second, it can give your customers a way to reach you without giving out your personal phone number. Finally, it can help you keep your business and personal life separate.
8. Get a business loan.
If you need to borrow money for your business, it’s important to get a business loan. This way, you can keep the loan and the interest separate from your personal finances. Talk with your accountant or financial advisor to see if this is the right option for you.
9. Don’t commingle funds.
One of the worst things you can do is commingle your personal and business finances. This means using your business account for personal expenses or using your personal account for business expenses. This can make it very difficult to track your finances, allowing expenses to get mixed up. It can also create problems come tax time. So, it’s important to keep your finances separate as much as possible. If you need to use your personal funds for business expenses, be sure to keep good records so that you can deduct them from your taxes.
You should make sure to keep your personal and business finances separate as much as possible. If for some reason you need to use one account for both, make sure you keep good records so that you can deduct expenses come tax time. An accountant or financial advisor can also help you set up a system to keep your finances separate.