Keep it Business, Not Personal
** A quick-start guide for home-based businesses - learn how to
keep your business and personal finances separate.
Managing a small corporation, as well as having a home-based
business myself, I have learned how important it is to keep
personal and business matters separate. Not only does it make
life less confusing, it can also save you money on your taxes.
The first thing I recommend is to open a separate checking
account just for your business. Use this account to deposit all
self-employment income. Do NOT use this account for wages
received from an employer. This account needs to be totally
separate. You will pay all your business related expenses solely
from these funds. When you pay business expenses from your
personal account, it is much more difficult to accurately track
how much money you are spending for your business. And, missed
expenses could mean missed tax deductions!
The other suggestion I have is to open a credit card
specifically for your business expenses. Make sure you choose a
card that suits you and your business well: i.e. cash back,
travel rewards, etc. Use this card for all your business
purchases and of course, make payments to it with your new
business checking account. For more detailed benefits on a
dedicated business credit card, I highly recommend reading
Charles Clar's article at
http://creditcards.youngparentsmagazine.com/A-Dedicated-Credit-Ca
rd.htm
Last but not least, I recommend purchasing some form of
accounting software. It doesn't have to be anything fancy or
expensive, just a place for you to enter your income and
expenses for your business. Even a very simple program can
provide you with financial reports demonstrating your company's
profitability, as well as help you to set a budget. Most
programs also give you the option to print reports that aid in
tax preparation.
As with any other financial decision, I highly recommend you
meet with an accountant or tax preparer on an annual basis at
the very least. He/She will be able to direct you in the best
ways to make the most of your hard earned money. But remember,
the harder you work at keeping your business and personal
records separate, the easier it will be for your accountant to
help you. Best of luck in your business and please visit us at
http://creditcards.youngparentsmagazine.com/ for more articles
on credit and your business.
About the author:
Jennifer Tarzian holds a Bachelor of Science degree in
Psychology. Her experience includes sales, service, and managing
a small corporation. She is proud to be a stay-at-home mom.
