One of the most essential bookkeeping tips is keeping your business and personal finances separate.
If you are serious about your business, you should be serious about your professional image. Keeping business and personal finances separate helps establish your business identity.
Maintaining accurate records of your business finances will also save you time and money. Many businesses have a tendency to mingle personal and business finances, and they waste time separating them themselves or spend money hiring someone else to do it.
Tax deductions and writing off business expenses is another big reason to separate business and personal finances. Having business expenses separate can help if your business is ever audited by the IRS. However combining your personal and business finances can result in both a personal and business audit.
One easy way to make sure you keep your business and personal finances separate is by having a separate bank account and credit card for your business. Bank policies for setting up business accounts can vary, but before getting that business bank account, you will likely need to determine the proper legal structure for your business.
Talking to an expert can help you determine the right legal structure for you. For example, a limited liability company is a good way to have a distinct difference between business and personal expenses. This structure also offers the benefits of legal protection as well as pass-through taxes.
If you have questions about setting up your business structure and bank account, BTB can help. Contact us today for your free consultation.
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