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Advice on Keeping Business and Personal Finances Separate

ADMIN

February 28, 2022

As a business owner who is just starting out, you may be experiencing some anxiety about your finances. It is strongly encouraged to keep your business finances and personal finances separate. Continue below to learn why, plus some tips on how to accomplish this important element of business ownership with optimal efficiency.

Personal and Business Finances Should Be Separate

Your real life and the life of your company should be two separate entities. Although it is easy for this line to become blurred, it is important to try your best at perfecting this strategy for long-term success. Separation of business and personal finances is important because it helps prevent the likelihood of being blindsided by an IRS audit. Additionally, your business and personal finances should be kept separate for the sake of convenience and ease.

When you mix up your personal and business finances, it makes it much harder to organize your expenses, receipts, and taxes. The complexity of figuring out which expenses and receipts are for what can be incredibly stressful and even lead to making some significant tax errors.

Tips for Separating Your Personal Finances From Your Business Finances

→ Open a separate bank account just for your business.

→ Open a separate credit card that is strictly for business expenses.

→ Choose a business credit card that offers business-related amenities and promotions.

→ Do not use your business account to make personal purchases.

→ Do not use personal travel miles for business trips. Business trip expenses are deductible!

→ Keep receipts if you want to write off business expenses like entertainment or food.

→ Check to see if you are eligible for personal tax deductions, like childcare, charitable giving, and education credits.

Are you looking for a qualified accountant to help you organize and plan your business taxes? Contact Aspire CPAs, PC at 317-469-4500 to speak with a licensed accountant who specializes in business tax planning and preparation in Indianapolis, Indiana. You may also request an appointment, online.

Related Posts:

Business Tax Deductions You Likely Qualify For
Most Common Small Business Owner Tax Errors to Avoid
Common Tax Deductions for Small Businesses

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