Should I separate my personal and business finances?
Q: Dear Ruchi, I am a fairly new business owner who feels totally lost when it comes to organizing my finances. While I don’t have a ton of business expenses just yet, should I have a separate bank account for my business?
A: Yes, you should! It’s important to keep your business and personal bank accounts separate. When you’ve planned your finances effectively, your business will only run smoother. Not only is it good practice, it will also help you to feel more secure with the state of your business. Your peace of mind is priceless! This is always one of the first things I advise my clients to do when we start working together, if they haven’t already.
Remember, when it comes to time and money, you want to do your best to be as clear and as organized as possible. If you are not currently doing this in your business, start today! But not to worry, you are not alone and you surely are not the only business owner who has forgotten this key step.
Here are a few reasons you should start separating ASAP!
It will make your life easier during tax season and help you quickly identify write-offs and expenses for maximum tax break
You can track cash flow easily and accurately.
You can protect your assets in legal situations. Establishing a legal structure is important here too.
It’s more professional to the outside world–when a client deposits funds or writes you a check, they will see a business name.
It is easier to obtain loans as you will have all of your financial information in one place.
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Here’s to your prosperity!
Ruchi