Tips To Separate business And Personal Finances
Certain things just don't mix well. Like your personal finances and your business’s. Keeping these things separate not only helps you reduce problems, it also ensures that you know exactly what your numbers are at all times.
On paper this might sound simple to do, however when you don't start in the right way, you can end up in a real mess.
When you first started your business, like many entrepreneurs, you may have used your assets for startup capital or may have secured a business loan based on personal assets.
As your business grows, creating a clear boundary between your personal and business finances is crucial to staying on the right side of the law as well as ensuring you know what is a business expense and what is personal.
Even if you’re just starting, it’s essential to split up these two parts of your money life. Treat your business, no matter how big or small, like a viable entity.
Some tips from us:
Get a business debit or credit card
Opening a business debit card or credit card allows you to stop using personal accounts for business transactions, this can then be setup as your day to day operating account and it’s an easy way to draw a clear line between personal and business expenses. Always keep your personal credit card seperate.
Open a seperate account for tax (and talk to us about the profit first model)
Opening a business tax account and ensure you put money into here each week which allows you to be able to pay your GST, annual taxes that will be due, PAYE etc. This way you will never be scrambling to find money to pay IRD.............. Remember this is money that is not yours, so set aside and you will not have to worry about it.
Separate your receipts and keep them
Keeping your personal and business expenses separate and ensuring you keep a copy via some app is always a great way to ensure you can reproduce these. We use Receipt Stash and this way they are stored here, in the accounting system and can be reproduced if ever asked for by IRD. You can then throw away the actual receipt as we have a copy of it. This simple practice helps you sleep easier knowing that if the IRD ever comes knocking, you’re prepared.
Don't know where to start with separating your personal and business finances? We can help get you on the right track from the start and give you other tips as well so get in touch with us today.