Reasons to Separate Business and Personal Spending
Jul 09, 20241. Make tracking your transactions easy.
Don’t waste your time searching through all your personal transactions looking for the business spending between grocery runs, trips to target, and amazon orders galore. Not only is it a waste of time, but you run the risk of missing a business expense that could go towards your tax write-off.
2. Look and feel professional.
You want your clients to know they are working with a professional. Don’t make your business appear unprofessional by mixing up personal and business spending. Mindset can be a powerful tool and setting up your business legitimately will go a long way.
3. Legal protection.
In the event your business gets audited or sued, it is best practice to have your accounts separate to help protect your personal assets. It is a simple process to set up a bank account for your business. Do yourself the favor now and give yourself peace of mind knowing that you are taking the necessary steps to run your business efficiently and securely.
Bottom line: Keep it separate! It may seem like more work to have multiple accounts, but in the long run you will save yourself a lot of time and be much more organized. Set yourself up to feel established and professional.
Things to keep in mind when doing research on what bank to choose:
- Is there a minimum required to open the account
- Is there a minimum balance requirement to avoid fees
- Are there maintenance fees, overdraft fees, transaction fees, etc.
- Account features (can it connect with the accounting software you use)
- Our choice of accounting software is Xero - here is a list of banks feeds compatible with Xero
- Read some reviews / get a gauge on quality of customer support
Set up an appointment right now! Make sure you take a look at the required documents and have them ready to go. This can differ bank to bank, so get a specific list from the bank your are opening the account with.
Quick tip: If you don't have enough money in your business account and need to make a business purchase, transfer the money from your personal account over to your business account first and then make the purchase through the business. This reenforces that business spending happens ONLY through the business account, and keeps your business spending as organized as possible.