Business Banking Accounts: The Importance of Separating Your Monies

Personal finances and business finances should not mix. Even if you only have a small, “small business,” you want to separate your personal finances from your business finances. Why? There are several reasons why you want to keep things separate and open a business banking account.

It Helps You to Keep Track

Having all of your money in one big pool may seem easier, but in reality, it’s not. If your personal income is mixed with your business income, how do you ensure that your business is paying for business expenses? Conversely how do you ensure that your personal income is funding your personal expenses?

It Simplifies Your Taxes

As a business you can deduct your business expenses. It’s much easier to find your deductible expenses if you have a business banking account. Having a separate bank account makes it easier to find your deductions. It also makes it easier to separate all of your personal expenses from your business expenses so that you can file your taxes and your business’s taxes. Having to go through all of your expenses for the year and separate them out would be a pain.

It Makes it Easier to Pay Yourself

Many small business owners neglect to pay themselves. You have to plan for your future, and you want your business to make money. Paying yourself helps to ensure that you are making money. It’s much easier to pay yourself (whether you choose a salary or an hourly wage) when you have two separate accounts. Each month (or twice a month if you prefer) simply transfer your salary from one account to another.

If all of your income is lumped into one account, it’s much harder to pay yourself. You can move money to a savings account from a checking account, but when it’s in a business account, you can ensure that all of the money you transfer is actually coming from your business income.

You want to be sure to contact your local bank to find out what documents you need to open an account. Opening a business banking account may take a little time, but it’s something that you should definitely consider doing. Just consider it to be one of the steps that you should take when starting a business.

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