With so many things to do when starting a business, thinking about your business finances may not be at the top of the list. Unfortunately, this can cause issues down the line. If you are an LLC or S-Corp, not keeping your finances separate can remove the legal protections that come with these titles.
1. Open a Separate Checking Account
You can start with a second personal account, or you can jump straight to a business account. The important thing to remember is that you keep your business income and expenses separate from your personal ones. These usually come with a savings account, which will come in handy for saving up for business emergencies and preparing for estimated taxes.
2. Pay Yourself Regularly
Money that your business makes belongs to the business, so you’ll need to legitimately pay yourself to get that money over to your personal account. Know how much you need to bring home each month as well as the status of your business finances by keeping budgets for each, and then pay yourself accordingly.
3. Have a Designated Credit Card
Eventually, you might need to put something on a credit card. You will need to get a business credit card that can pay for all your business needs and then be paid off using your business checking account. Doing this will also help build your business credit, and might even earn some credit card rewards.
4. Keep Clean Records
Perhaps the most crucial tip is to keep clean records. Record what you spend and which account it comes out of. Repay any business expenses that came from your personal account immediately. Know where the money is, where it’s going, and how you paid for it. Keep your receipts, good records, and separate your personal and business finances, and you’ll be ready for tax time.
To learn more about your financial options, reach out to Northgate Capital Finance today.