5 Important Things Startups Must Do To Keep Business and Personal Finances Separate
Posted on April 22, 2013
When you own a startup or small business, it can be tempting to combine the money the business makes with your personal money. It is crucial that you not do this. Keeping business and personal finances separate is important for tax purposes, as well as for keeping the business financially secure. So, what are some things you can do to keep your personal and business finances separate?
Have Multiple Bank Accounts
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Never, ever combine your household money and the money from your business in one bank account. You need to ensure that you keep separate accounts. This will help ensure that the money is kept separate. It will make it more difficult to access the business money. It will also take away a lot of temptation to use business money for personal funds.
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Keep Track of All Income and Expenses
Make sure you keep all receipts for the business. It’s also a good idea to keep your personal receipts, as well. However, keep them separate. On top of keeping receipts, you need to track all income for the business. It’s smart to use a business software to help you track all of this, so that you don’t forget things, or lose information. If you invest money for the business or personally, videos by Fisher Investments can help you understand how to track this as well.
Have a Separate Credit Card for the Business
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A business credit card is extremely helpful for keeping business and personal separate. You will be less tempted to use personal money for business expenses if you can use the business card. Though most people are generally concerned about using business money for personal items, too frequently it goes the other way, as well. With a business credit card, you are able to minimize or eliminate this problem. On top of that, a business credit card can help build the credit of the company, helping you even more in the future.
Give Yourself a Salary – And Stick to It
If you don’t profit from your business, what is the point? When you are running a business, the best way to make money from it is to give yourself a salary. Decide on an amount, and stick to that. Don’t change the number constantly; consistency is key. The salary you give yourself should be paid like any employee from the business account into your personal account. This will help you keep that company/personal line a little stronger.
Keep Records and File Taxes
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Keeping proper records of everything is important. It will help you when it comes time to file taxes. And when you do file taxes, it is good to be able to show how you have kept business and personal finances separate. This will help keep you from being audited (though, of course, there is never a guarantee).
Your money is important, both to your personal and professional life. Keeping track of your finances, and keeping business and personal separate will ensure that you know where your money is going and can look ahead to any possible problems in the future.