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…this needs to change. Today. 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.
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 in to 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 and figure out what is business and what is personal. You’ll thank me come tax time too!
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 when you start a business. All of your business income should go into this account and all of your business expenses should come out of it.
- 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 – Whether you have your credit card in your business name or your personal name is up to you. BUT, you MUST keep them separate. If you have your business credit card in your personal name, make sure you’re only using it for business expenses. Keep a personal credit card for personal expenses and don’t mix them up. Mixing up credit cards is like mixing your accounts – it gets messy, chaotic, and hard to keep track of.
So, if you’re still using the same account for business and personal finances, now is the time to make the switch. Go now! Make a plan to open separate accounts and leave the chaos of mixed accounts behind you!
Leave a comment and tell me – do you have separate accounts?
