Business Finances - You Have to Keep It Separated
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BUSINESS VS PERSONAL FINANCES
One of the main reasons for taking the time to set up your business is to protect yourself from legal liability and to make sure that your company can easily comply with tax regulations. Keeping separate finances for your business and personal life is essential to your success.
Remember to keep your business finances separate from your personal finances for several reasons:
Legal liability: If you don't separate your business and personal finances, you risk losing your personal assets if your business is sued or goes bankrupt, even if you have an LLC.
Tax purposes: Keeping your business finances separate makes it easier to file taxes and claim deductions.
Professionalism: Keeping separate finances shows that you take your business seriously and are committed to its success.
Clarity: It's easier to track your business expenses and income when they are separate from your personal finances.
HOW DO I START SEPARATING MY FINANCES?
You can start by creating a bookkeeping account for your business, either in an app or with an accountant. Once you have established your account, you should go through your personal finances and add each transaction (credits and debits) to make sure that you have accounted for all of your expenses in your business records, this will ensure that your reporting is correct. You will also want to label those expenses as business expenses in your personal accounts for tax purposes.
CREATING A BANK ACCOUNT
Now that you have a bookkeeping account, you need a business bank account. I have done a lot of research on different types of business bank accounts and have banked with large, national banks as well as local chains. The best solution for business banking that I have found for business is bluevine. I love bluevine because it is all online, has a high interest rate (2%!) and has an easy bill pay option. bluevine also allows you to create sub-accounts within your regular bank accounts for free. This is great if you like to put your money in different “buckets”, like saving for taxes.
APPLYING FOR CREDIT CARDS
Credit cards are a great way to conduct business and get cash back or points for your regular purchases. I believe that a responsibly used credit card is a necessity for business. It build your business credit and protects you from liability when making online payments because debit cards are more susceptible to fraud than credit cards. My favorite business credit card is the Chase Ink Business Unlimited card. There is no annual fee and the cash back/travel rewards are excellent and Chase customer service for their business credit cards is very good. Like with any credit card, you want to watch your balance closely and be sure not to over-spend because credit card interest is very high.
Bonus - Disney Personal Credit Card
My favorite credit card in my wallet is my Disney Rewards Visa, this card is not available for business use (darn) but it has some pretty great personal benefits for cardholders, like Disney Reward Dollars, special vacation financing, savings on shopping and dining at Disney Resorts, special photo opportunities and 10% off select purchases at shopdisney.com.
FINAL STEPS
Once you have created accounts for your business banking and credit card, connect your accounts to your accounting app or to your bookkeeper and you can keep up with managing transactions from there.