Small Business Rule: Keep Company and Personal Funds Separate
Congratulations! You have a business that is thriving and making sales. But where is your business revenue going when the sale is said and done? Hopefully not into your personal banking account. While using a joint account for both your personal and business funds can be convenient, it can lead to some big problems. It can complicate things beyond repair, especially during tax season. Another thing that business owners don’t consider is the pure confusion it can cause. You can easily mix up sales revenue and your personal finances and leave either one short.
Separating Business and Personal Accounts
Business credit cards are a great way to access the funds your business needs while keeping your personal account out of the picture. This way you can keep your credit lines separate without worrying going over one of them. Opening a business checking account in addition to the credit card will make for easy business revenue deposits and will ensure zero withdrawals from your personal account.
Another way to make sure fund don’t deplete in either area is to make sure you are putting money from your business account into your checking as a “salary” for yourself on a schedule. Although it may take a while for your business to make this happen if you are a relatively new business, making sure to keep your personal account up is important.
Don’t forget tax time! If you are a business that uses personal items for business, such as a laptop, you can write off your Internet bills off on your taxes as a business expense. Keeping these two accounts separate is a safe way to avoid getting audited by the IRS.
Although it may be tempting to use your personal account as the home of your business revenue, but it can lead to a lot of problems. Keeping these two separate can avoid a huge headache later on. The best part about having your own business account is establishing your own business credit. Your business will build credit on its own instead of piggybacking on your personal account.
Take Financial Caution a Step Further
Is your business receiving more orders than you can fill? We can help. The factoring marketplace can get your business the funds you need to take orders and make sales all the while keeping a steady cash flow for other needed expenses. How do we do this? We use our marketplace to put you in touch with the best factoring company in your industry to get you funded. Check out the ins and outs of invoice factoring and how it can help grow your business.