If your firm's startup capital was sourced from your personal savings, there's a good chance that you run all your funds through the same bank account. While there's nothing wrong with the first part, the latter could be your first step towards self-destructing. Without a separate business bank account, tactical money management will be impossible to achieve. And this isn't the only reason why you should implement a financial division.
It's much easier to identify business expenses when your finances are separated. This translates to less time spent combing through bank statements when it's time to file your tax returns. On the other hand, having your business and personal funds intertwined could cost you in more ways than one. Besides the time you'll waste trying to sort out the mess, there's also the risk of incurring the wrath of the taxman.
No matter how small your company is, you want other parties to feel confident in their dealings with you. While there's much you can do to polish your professional image, combining your finances won't help your cause. Customers will start doubting your credentials when they make payments into a bank account in your own name. In other words, your business is more than a hobby to them, and your finances should be treated as such.
One of the benefits of structuring your business as a corporation is the shield that this status provides to your personal assets. For this to work, you have to separate them from those owned by your company. Otherwise, any action filed against your company by creditors will expose your wealth to forfeiture.
Whether it's the seasonal working capital injection or a long-term loan, funding from outside sources will be vital to the growth of your company. Keeping finances separate means your business will develop its own credit profile, which will come in handy when you will be dealing with lenders. It will also save you a lot of work when demonstrating your firm's financial records.
Tracking your organization's financial health is part of what you should be doing to maintain progress in the right direction. Without discounting the need for professional bookkeeping, this will be easy to do when business records are kept clean and error-free. On the same vein, your accounting department will also appreciate the effort you've put into splitting your finances.
Even the most profitable venture will come tumbling down if its shareholders use it as their personal cash register. As you've probably guessed, this is more likely to happen when you and your company's lives are financially tangled. In such a case, chances are that you'll use your personal funds to bail out your company or vice versa. Either way, success will be hard to come by.
The fact that you're a small business owner means you probably have more on your plate than you can comfortably handle. Obviously, opening up a separate bank account for your business will mean more administrative work for you. As true as that may be, it's the only way to avoid the potential pitfalls of running your finances via the same account.
It's much easier to identify business expenses when your finances are separated. This translates to less time spent combing through bank statements when it's time to file your tax returns. On the other hand, having your business and personal funds intertwined could cost you in more ways than one. Besides the time you'll waste trying to sort out the mess, there's also the risk of incurring the wrath of the taxman.
No matter how small your company is, you want other parties to feel confident in their dealings with you. While there's much you can do to polish your professional image, combining your finances won't help your cause. Customers will start doubting your credentials when they make payments into a bank account in your own name. In other words, your business is more than a hobby to them, and your finances should be treated as such.
One of the benefits of structuring your business as a corporation is the shield that this status provides to your personal assets. For this to work, you have to separate them from those owned by your company. Otherwise, any action filed against your company by creditors will expose your wealth to forfeiture.
Whether it's the seasonal working capital injection or a long-term loan, funding from outside sources will be vital to the growth of your company. Keeping finances separate means your business will develop its own credit profile, which will come in handy when you will be dealing with lenders. It will also save you a lot of work when demonstrating your firm's financial records.
Tracking your organization's financial health is part of what you should be doing to maintain progress in the right direction. Without discounting the need for professional bookkeeping, this will be easy to do when business records are kept clean and error-free. On the same vein, your accounting department will also appreciate the effort you've put into splitting your finances.
Even the most profitable venture will come tumbling down if its shareholders use it as their personal cash register. As you've probably guessed, this is more likely to happen when you and your company's lives are financially tangled. In such a case, chances are that you'll use your personal funds to bail out your company or vice versa. Either way, success will be hard to come by.
The fact that you're a small business owner means you probably have more on your plate than you can comfortably handle. Obviously, opening up a separate bank account for your business will mean more administrative work for you. As true as that may be, it's the only way to avoid the potential pitfalls of running your finances via the same account.
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