I’ve said this before, and I’ll say it again – if you have your business money and your personal money in the same account, you HAVE to change it.
I need you to stop what you’re doing and immediately open up another account. You HAVE to have your personal and business finances separate. You can’t possibly keep track of your separate expenses when they’re together, which will only cause you MORE stress and MORE chaos.
Here are 3 reasons why you need to have separate accounts:
- So you can easily keep track of what is business money and expenses and what is personal money and expenses.
- So you know exactly how much money your business is making. You can’t do that when you have other streams of personal money coming in (i.e. Your spouse’s money).
- So you know that your business money is paying your business expenses instead of your personal money paying your business expenses or vice versa.
So, in case I didn’t make myself clear… Having separate accounts for your business money and your personal money is a MUST! It will make your finances easier, more manageable, and a heck of a lot less stressful.
I know it might seem beneficial to have your accounts together so you can pay personal bills, like your mortgage, insurance, phone bills, etc., but it doesn’t. My recommendation for this is to PAY YOURSELF. Pay yourself and transfer your “paycheck” into your personal account. Now, you can easily keep track of this transaction in your business account as an expense and in your personal account as an income source (and therefore pay your personal bills with your now-personal income).
Here are 3 ways to get started with the transition to separate accounts.
First off, you need to open a bank account for your business – all of your business income should be deposited into this account, and all of your business expenses should be pulled out of this account
Pay yourself a salary – give yourself a set salary and pay yourself on a consistent basis and not randomly. Set it up just as you would in the corporate world. Maybe it’s weekly, every two weeks, or once a month. But, give yourself a payday and an expected salary. Check your business expenses and operating costs and use those numbers to determine what a fair and affordable wage is for you.
Have a business credit card – if there are times you need a credit card, have a separate one for your business. This will, again, keep your numbers easy to manage, and you’ll know exactly how much your business owes on its credit card instead of sifting through personal and business expenses.
When it comes to business finances, that is my MUST DO TIP. There’s no negotiating on that one. If you have a business, you NEED to have a separate business account. Now GO! Get a separate bank account for your business and leave all the chaos of mixed accounts behind!