 |
 |
 |
 |
 |
 |
 |
finance / November 2010
Separating Business and Personal Finances
Separating your personal and business assets offers you a better sense of how your business is doing, and makes it easier to handle your taxes and get additional financing when you need it. And, should you ever come under IRS scrutiny in the form of an audit, the process will be made much easier.
Some of the keys to building walls between business and personal finances include:
- Keep separate accounts—Among the first things you should do is open separate checking and savings accounts for the business. Not only does it help keep you financially in line, but it lets the IRS know that this is more than just a hobby. If you use Quicken, QuickBooks, or Microsoft Money, you may want to create two separate systems: one for personal and one for business. Separating those functions also ensures that, at year-end, all your income and expenses will be in one place, making record-keeping and tax filing easier.
- Use a business credit card—Similar to a separate checking account, a credit card will aid in record-keeping and give you something to show the IRS if you're audited. A business credit card may also get you a tax deduction, as a business credit card qualifies as a deductible business expense.
- Choose a structure—Establishing your business as a limited liability company (LLC) or an S Corp. offers a level of liability protection, as well as potential tax advantages. Speak with your attorney or financial advisor about the structure that makes the most sense for your business.
Having a checking account, credit card, and record-keeping software exclusively for business can assist in easing tax filing and can help you keep your own accounts straight.
Sources: "Keep Your Business and Personal Finances Separate," Entrepreneur
Salem Five Resource
Access Your Finances 24/7 with Web Cash Manager
Salem Five Web Cash Manager gives you access to your finances whenever you need it. And the service helps you streamline your cash management by allowing you to: concentrate, disburse, or transfer funds between accounts, inside and outside the bank; pay most state and federal taxes automatically ; offer employees direct deposit of payroll; pay vendors electronically; and even do it all with your mobile device.
finance articles
- Key Business Tax Dates: Part 2
- Key Business Tax Dates: Part 1
- Financial Ratios as a Road Map
- Get Paid Faster
- Cash Flow Fundamentals
- Tracking EVA (Economic Value Added)
- Strategic Cost Management
- Figuring Out the Pricing Puzzle
- Vendor Discounts: You Don't Ask, You Don't Get
- The Pricing Paradigm: How Low Is Too Low?
- Keep Exposures Covered
- Should You Fire Your Customer?
- Getting to Break Even
- Using Your Capital Structure
as a Hedge Against Risk - When Does It Make Sense to Buy Your Business Real Estate?
- Using Credit Cards the Right Way
- Digging Deeper with Cash Flow Sensitivity Analysis
- Building a Budget 101
- Separating Business and Personal Finances
- Get Help Playing the Numbers Game
- Save Power, Save Money with an Energy Audit
- Getting Ready for Financing
- Look Before You Lease
- Credit: Lines vs. Cards
- Cash Flow Projections in Four Steps
- Understanding the Language of the Income Statement
- What's Your Business Worth?
- Keep Your Credit Under Control
- Controlling A/R and A/P
- Budget for the Best, Plan for Any Eventuality
- What Not to Cut
- Proactive A/R Management
- Critical Numbers and Your Company’s Financial Fitness
- The Critical Ratios: A Short List
- Choosing Cash-Flow Management Tools
- An Expense Control Audit Reigns in the Overhead
- A Road Map to Healthy Cash Flow
- Building Your Credit Safety Net
- Financing: What Lenders Want
- Estate Planning for Non-Financial Assets
- Lowering Your Liability
- Paying off the Mortgage vs. Paying Into 401 (K)
- Steering Clear of Payout Pitfalls
|