Before I say anything more about this I need to start with…THIS IS A MUST!!!!
If you have all your business money and expenses coming in and out of your personal account…run, DON’T walk to the bank right now and open a business account!
Having your accounts together is causing you SO much more chaos with your numbers than you even realize right now.
How can you easily keep track of what is business and what is personal?
How do you know how much money your business is making if you have other streams of income going into the account (ie. Spouse’s income)?
How can you make sure that your business expenses are being paid by your business income?
Long story short – you can’t!!
Having separate accounts WILL make your finances so much easier, so much clearer and WAY more manageable.
I hear from my clients a lot that “I need to have my business income in my personal account so that I can pay my personal bills (ie. Mortgage, insurance, etc)”. I get that but this is where you use your business income (after expenses) to PAY YOURSELF!
You will transfer money from your business account into your personal account for personal expenses. Think of it just like you would if you were working in a corporate job. They pay you and the money goes into your personal account to be used. Your business is now paying you into your personal account. It is the same!
When you have a separate business account you are able to easily see how your business is doing, what money you’re bringing in and what expenses you have (don’t forget…one of those expenses should be your salary). You don’t have to fish through and figure out what is business and what is personal.
Here are a few tips that will easily help you make the transition to separate accounts:
- Open a bank account for your business – This is one of the first things that should be done and all of your income should come through this account as well as all of your business expenses.
- Pay Yourself a Salary – Paying yourself consistently – a set amount instead of randomly transferring money will help you stay on budget for your business expenses and your personal. In order to figure out what you can pay yourself; remember to consistently check your operating budget and business income that is coming in and plan accordingly.
- Credit Card for your Business – You can either have one in your business name or you can have a personal one. However, and this is a huge MUST – if it is a personal one – it needs to be one designated ONLY for your business. For example – I have 2 personal credit cards. However,
one is my “Business” credit card and the other is my personal one.
I do not mix them. Again this helps keep the personal and business finances separate.
Now GO! Get a separate bank account for your business and leave all the chaos of mixed accounts behind!
Leave a comment and tell me – do you have separate accounts?