“Should I keep my business and personal finances separate to make things easier on myself?” That’s a question that many small business or self-employed people ask themselves. It’s something that should be done; but, doing so, can be a rather tricky process. It’s important though if you want to ensure your transactions go as smooth as possible.
You want to keep your stress level down when organizing your taxes, developing realistic projections and a host of other tasks. How can you be sure to separate your personal financial life from your business financial life?
Your life will be so much easier if you maintain a separate account for your business and your personal life. You know that whatever money goes in and out of the account is related to your business, ensuring that tax deductions is less strenuous. It’s easier for you to know how much money your business has at any time without the need to factor in personal costs.
You have an array of business-tailored accounts to pick from – each one with their own interest rates, perks, etc. If you trade internationally, then you need to consider the foreign currency account. It’s also a great way to steer clear of the ever-changing exchange rates or agency fees to change cash into your currency.
It’s a good idea for the business to have a credit card, eliminating the chance for you needing to pay debts off the business has run up. It also allows the business to establish some credit history – to secure investments or financial backing for the future. This has been extremely difficult to do the last few years.
The better you organize your records, or more to the point the more up-to-date they are – the easier it’ll be to handle discrepancies or questions that crop up. With proper organization and planning skills, you can handle all your business finances quickly and efficiently.
When you’re running a business of your own, it can be easy for lines to become blurry, especially when it comes to what’s rightfully yours. When it comes to a salary, you want one that allows you to live comfortably but doesn’t take away from the daily and monthly business expenses. The idea is to let the business grow. Give yourself a salary that allows you to pay your bills, get food and other expenses so you’re not worry about how to pay for the business’ expenses every month.
Now, you don’t want to constantly keep pumping money into the business. By doing this, you’ll eventually be unable to meet your personal financial needs and the business won’t continue to thrive. You want both your personal and business life to be two spate entities that function well on their own. You want each one to support each other, not be dependent upon one another. Thus, you need to know what finances the business has so you can safely sure the support it needs.