Keep It Business And Not Personal
Learn How To Simplify Your Life By Keeping Your Business And Personal Finances Separated
Hi Folks
I have had a few questions this week about Taxes so this blog is about keeping your business and personal finances separate.
Managing a home-based business myself, I have learned how important it is to keep personal and business matters separate. Not only does it make life less confusing, it can also save you money, especially on your taxes.
The first thing I recommend is to open a separate account just for your business. Use this account to deposit all self-employment income. If you are still employed elsewhere Do NOT use this account for wages received from an employer. This account needs to be totally separate.
You will pay all your business related expenses solely from these funds. When you pay business expenses from your personal account, its much more difficult to accurately track how much money you are spending for your business. Missed expenses could mean missed tax deductions folks.
The other suggestion I have is to open a credit card specifically for your business expenses. Make sure you choose a card that suits you and your business well: i.e. cash back, travel rewards, etc. Use this card for all your business purchases and of course, make payments to it with your new business account.
Last but not least, I recommend purchasing some form of accounting software. It doesn’t have to be anything fancy or expensive, just a place for you to enter your income and expenses for your business. Even a very simple program can provide you with financial reports demonstrating your company’s profitability, as well as help you to set a budget. Most programs also give you the option to print reports that aid in tax preparation.
As with any other financial decision, I highly recommend you meet with an accountant or tax preparer on an annual basis at the very least. He/She will be able to direct you in the best ways to make the most of your hard earned money. Remember, the harder you work at keeping your business and personal records separate, the easier it will be for your accountant to help you.
I hope I have answered some of the questions asked and if anyone has more tips and advice I'm sure they will be gratefully received by the readers of this blog.
Have a great day folks and be successful.
Robert Allan
Recent Comments
52
Thanks, Robert I have been using turbo tax for my personal income tax do you think I will be able to continue to use Turbo Tax or will I need a professional to prepare the business account.
No harm in talking to a professional for clarification Ruthkyn.
At lesast you will know where you stand.
I would keep using Turbo Tax as it means you will have all pertinent information to hand.
Thank you for reading and for your input.
Robert
This is great Robert. Do we need an LLC or anything like that in order to open a business account?
Not too sure about Limited Liability Beth unless you are really making a lot of money and you actually hire people to do some of the work for you.
Here you go and it might give you a better idea
https://en.wikipedia.org/wiki/Limited_liability_company
Thank you for reading.
Robert
Always best to keep yourself covered in case of undorseen events such as a surorise tax audit.
Thank you for reading Sherman.
Have a good one.
Robert
Hi Robert
So important, thank you!
I keep both my credit cards in my purse, but have marked one of them with a flower sticker, to identify it as the private card.
Wishing you a lovely day!
Sharlee (Chocolate IceCream)
Hello again Sharlee and thank you for reading.
Always best to keep the personal separate from the business.
Hope your day is going well so far.
I will def be off to a hot bath soon.
Robert
Great advice Robert. I have separate business and personal bank accounts, credit cards and PayPal accounts. Otherwise it would get too messy.
Hi Marion, nice to see you taking time out of your busy day to read my blog.
I pay a lot with my PayPal and I actually gave my American Express and Master Card back.
Too many can be just as bothersome as just a couple.
I believe I have a nice arrangement now and I can keep track.
Have a great Tuesday.
Robert
Excellent advice! ... depending upon the operating jurisdiction of the business owner and the level of revenue / income -- may need to look at incorporation versus staying as a sole proprietor status ...
....and of course, if there's ever any doubt, it is best to have a consultation with your local business professional tax adviser ...
thanks kindly for posting today, cheerio ... 😊
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thank you Robert, very helpful article.
Happy to share my information with the membership Pinky.
Thank you for stopping by.
Robert