Quite a few entrepreneurs are already well aware that it can be very easy to get personal and business finances tangled together. They know all about this because they’ve been in that situation before! Even though it can be quite difficult trying to keep the two completely separate, it is essential to do so for tax purposes. Not only that, though, but it also prevents you using any of the business money for personal needs and vice versa.
If your two sets of finances are edging ever closer to one another, it’s really important that you find a way to keep the two distinct. Read on to discover some useful tips that can really help you with this!
Keep Receipts Separate
In order to take advantage of business expenses, you will need to keep the receipt or invoice for the particular product or service. It’s also crucial to store some of your personal receipts so that you can check them off against your bank account to make sure the money has left your account. As you are storing so many receipts, you need to make sure that you keep them all separate. Ideally, keep your business and personal receipts in their own shoeboxes or desk drawer.
Don’t think about it any longer. For business finance advice and funding visit https://t.co/kNB9cQJ8yw for the options. #business #startup #finance #funding #loans pic.twitter.com/XTCGVr1mlY
— BusinessLoansCentre (@Biz_LoansCentre) May 27, 2018
Give Yourself A Salary
When you set up a business, there are two main ways to pay yourself. You can either start paying yourself a salary or pay yourself in dividends. Ideally, you need to go with the salary as this will be a set amount paid into your personal bank account on the same date every month. It makes it easier for you to keep track of your personal spending, and you will be less likely to dip into your business funds whenever you need to make some purchases.
Don’t Use One Set Of Finance To Solve Problems With The Other
Sometimes, entrepreneurs use their business finances to help their personal ones when the latter is not too healthy. This can also happen the other way around, and some entrepreneurs end up using their personal finances to solve problems with their business accounts. This isn’t a good idea as it could deplete both accounts. If you do have an personal finance problems, you should consider learning about chapter 13 rather than using your business to help you. Similarly, if your business runs into issues, you should research ways to improve your company’s finances that don’t rely on using your own personal money.
Get Some Financial Help
It can be very difficult to keep your personal and professional funds completely separate, especially if you work from home and don’t have any prior financial knowledge or experience. Don’t worry if it all gets a bit too much, though, as you can always hire an accountant to help you with this. They can organize all of your money and look after all your receipts so there is no way any of your finances will confuse you!
Keeping personal and business separate is always key when it comes to finance!