Some small business owners make the mistake of using their personal bank accounts for business purposes. Unfortunately, they are creating problems for themselves. As a small business owner, you must, must, must keep your personal finances and your business finances separate. You need a business bank account for your small business in order to:
- Keep the Internal Revenue Service happy. They want to know that you have a very clear distinction between your personal affairs and your business affairs. They want details. If you try to pass off personal expenses as business expenses, you’re violating tax laws. They don’t like that. Need I say more?
- Provide information to lenders and vendors. If you ever need to borrow money for your business or get credit from your vendors, your lender or vendor will want to see detailed records of your business performance. Handing them your personal checkbook register is not going to make them want to give you money or sell to you on credit.
- Analyze and adjust. You need to know how your company is performing at all times so you can plan ahead, make adjustments in your operations, and make informed decisions.
- Maintain accurate records. The more accurate your records, the more accurate your tax return. It prevents you from missing deductions.
- Know if your business is profitable. It’s the only way you’ll know whether your business is making money or if you’re just kidding yourself.
So, if you don’t have a separate checking account for your business, go get one. It’s easy and inexpensive, and it will give you clarity on how your business is really doing.
If you’re looking for a confidential, trusted advisor to give you apply-it-now practical advice, learn more about my consulting service and choose the consulting package that fits your business and budget at http://cashflowrollercoaster.com/consulting-packages.