Please Stop Commingling, please!!
My number one tip to small business owners, entrepreneurs and coaches?…
Stop mixing your business and personal funds!
I know, I know, everyone says that, but you’d be surprised how often I hear that people are not taking this simple step.
And yes, even if you’re a sole proprietor it’s a good idea to keep those funds separate. If your business is an LLC its crucial in order to maintain that layer of protection that a limited liability company gives you.
It’s so important not to commingle your business and personal finances. If you don’t see your business as a separate entity then neither will the government or anyone who may decide to sue you, or your business. So in order to protect your assets you must create a layer of separation.
Either way keeping separate business and personal funds/expenses is a good idea. Here’s some reasons why:
Unless they’re separate you won’t have any way to accurately track the financial health of your business
Makes tracking your business financials much easier which means less stress
Saves you time, no more wading through transactions and trying to figure out which ones are business and which are personal
Saves you money, if you’re outsourcing your bookkeeping they will charge you extra if there is a lot of commingling
Makes taxes much easier to file
Saves you time and money at tax time too, when you can clearly see what’s a business it is much simpler for your tax preparer to itemize those expenses and get your taxes ready to file quickly without over paying for their extra time
Makes you less likely to be audited by the IRS
And it’s really simple to do. Just open another bank account and use it ONLY for your business. If you don’t have an EIN open a separate personal bank account for this purpose.
If you want help with your bookkeeping, I’m here for you.
Everything from setup and training to DIY your books, to outsourcing your full service bookkeeping. All done virtually, I work with small businesses all over the country.
