How To Keep Your Business And Personal Finances Separate
When you start your own business, it’s easy to think that all the money should go into one pile and let the numbers sort themselves out. But in pretty short order it’s important to separate your business and personal finances for a number of reasons. Foremost, the separation provides legal protection for both you personally and for your business. For instance, if a lawsuit were to be filed against your business, your personal assets would be safe. Separating your finances also makes managing your taxes easier and significantly cuts down the risk of making big mistakes. Here are three easy ways to separate your business and personal finances to protect your assets and streamline your bookkeeping.
Open A Separate Bank Account
If all of your money, business and personal, is going into the same account it is virtually impossible to manage your business as a separate entity from yourself. Do yourself a favor and go over to your bank and open up an account to support the business you’re building. One important thing to note is that you must have created an LLC (Limited Liability Company) in order to open a bank account as a separate entity from yourself. If you haven’t taken that first step of establishing your business as an entity unto itself we highly recommend that you do for the sake of yourself and all your hard earned money.
Pay Yourself A Salary
It’s easy as a business owner to live off of the constant see-saw of your business. When the business makes money, you take some, and when it doesn’t make any money, you go without. But this method is neither fair to yourself and your family, nor is it realistic for the long term. Sit down with your finances and determine, based on what your business makes and what you believe you’re worth, how much salary you can pay yourself each month and stick to it. This ensures that your personal finances won’t suffer and that your business can operate independently.
Hire A Bookkeeper
Do you want to know the very best tool for helping you keep your business and personal finances separate? Hire a professional bookkeeper. Not your uncle, or your sister who was good at math in high school, but a real professional bookkeeper who can help bring order to your personal and business finances. A professional bookkeeper will help you manage your finances at every stage and provide you with documentation to help you make the best choices for your business and your personal finances.
Starting and growing your own business is one of the most exciting journeys you’ll ever go on! Business ownership allows you to strengthen your leadership muscles, use your creativity, and support you family through the creation of a company you can all be proud of. That said, we see too many business owners dig themselves into trouble by not taking care of their finances. If you need help managing your personal and business finances,contact us today.