When many small business owners or gig workers start out, they find it easier to use their personal bank account for business transactions. Although it may be easy at first, it causes problems for you in the long run. Create a separate business account as soon as your business gets off of the ground.
Mixing business and personal finance make it difficult to keep an accurate track of business expenses. Get a separate credit card for your business to further separate finances and build your business credit.
Continue reading for more information on personal bank accounts vs. business bank accounts.
Expenses, Deductions, and Cash Flow
Keep all your business expense records in one place. This helps analyze your business’s progression. It also allows you to see what expenses you can deduct from your taxes that year.
Easily conduct a cash flow statement to see where each of your transactions is going. By separating your accounts, you can compare cash from operating activities to your business’s net income to determine the quality of earnings. Use your statement to show investors the cash flow coming in and going out. This shows them your overall performance.
We advise you to digitize your bookkeeping rather than holding onto all your paper receipts. Use bookkeeping software like Quickbooks. Connect your business account to the software to keep track of your business transactions. If you mix your business and personal transactions, your record-keeping will confuse you and get off-balance.
Small Business Bank Account
Choose which bank account is best for you. Some business checking accounts are free. Other accounts need minimum balances and/or other requirements to waive the monthly fees. Business accounts offer you the protection that personal accounts do not offer. Customers and clients find it more professional to do business with someone that has an established account over a personal one.
In the event of an emergency, most banks will loan your business money when you have an account with them. Responsibly using a credit card helps your business establish a positive credit history, even though you may already have one personally.
Hire a Professional from PL Consulting
Hire a professional accountant and bookkeeper to help you maintain your business’s finances. Though this will be a financial investment, it will save you money and help smoothly manage your business.
Our professionals at PL Consulting and Bookkeeping Plus will assist you in finding the best bookkeeping software to connect your business bank account to.
We are your go-to resource for bookkeeping and accounting services. Our team serves the Baltimore, Maryland area and beyond. We customize our services to each client. Your ideas are unique to your business, and we understand that. We help you maintain good records and financial statements.