How To Keep Your Business Finance Separate From The Personal One

Posted on Jan 15 2016 - 8:43am by Editorial Staff

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Have you started your own business lately? Well, that’s amazing as it feels truly liberating to be one’s own boss. But then business comes with its own share of dilemmas and challenges and one of them is how to separate your business finance from your personal ones. It might look tough initially but as you start following the habit of separation, you would get adapted to it. The first thing that you have to remember here is that your business is a viable entity which is separate from your personal life and hence must be treated accordingly. Here goes an article that will equip you with the right tips to keep your business finance separate from the personal ones.

Set a different checking account

This is one of the most important points to keep in mind when you are looking to separate your business finances from the personal ones. You must have a different checking account for your company that will only deal with your business dealings. Do not use your personal accounts for business affairs as it would get really messy during taxes & financial reporting.

Store the receipts separately

When it comes to receipts, you should always store the business receipts and personal receipts separately. Make sure your family dinner bill does not get mixed up with your vendor’s bill. This way, it would be easier to keep track of the expenses in the respective fields. Your tax auditor would usually care about the personal receipts yet would be very serious regarding the business receipts.

Separate credit card

As with all the other things, you must have a different credit card for business purpose that would only look after the business expenses. Do not ever use it for personal expenses and vice versa. The separate credit card for business will help you to get a clear picture of your business credit history which would be handy while tracking the business expenses end of the month.

Set your business budget

Consider your business goals, chart out the mandatory operational expenses beforehand and then decide on your business budget for the coming month. Stick to it and please do not start pumping out from personal accounts to meet impulse business expenses. In case, you are compelled to do, make sure to fill up the personal account as soon as the crisis gets over.

Be transparent to your spouse & business partner

You must discuss the entire situation to your spouse and business partner so that they too can understand the significance of separating business finance from personal ones. Finance is a big affair and you need the support of your closed ones here to stay on the right track.

Tips for home office

If you are running office from your home, make sure to keep the expenses separate. For example, do not use your personal budget to pay bills for electricity used for the office room.

The business owners often run into debt for sudden necessary purchases say a new advanced machinery. In case, you face a similar situation with business debt, take to business loan programs and avoid personal loans.

 

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Editorial Staff

Editorial Staff at I2Mag is a team of subject experts led by Karan Chopra.