Of all the things that are available to you to help with your accounting and business planning needs, the cheapest also happens to be one of the best. It usually costs between $15 and $30 a month, and will help your businesses immensely. It’s a separate business and personal bank accounts! Even if you are a sole proprietor, here’s why this is one of the best investments you can make:
It helps give you an idea of your true business expenses. When business and personal expenses are being paid out of the same account, it becomes very difficult to determine how well your business is really doing.It doesn’t matter how much money the business is bringing in if the owners isn’t able to see where it is going out to.
It costs extra in bookkeeping/accounting fees. Bookkeepers and accountants charge more to clients without separate business and personal accounts. It also takes longer, and more of your time as a business owner to receive services. It’s stressful if you need a financial statement, or a tax return in order to get a needed loan for the business!
But suppose you are are a business owner says its all business until proven otherwise, sure, you save money in the short term, but…
The tax/legal costs can really add up. Audits take longer, and cost businesses more money when business and personal funds are in the same account. Off the record, many tax auditors say that the extensive amount of work involved in these audits makes them much less lenient, and it’s the business owners that pay.
On the legal side of things, Corporations (both C and S), and LLC’s risk potentially opening up all of their owners to personal liability for business problems. The most common reason that most people decide to start a Corporation, or an LLC is the liability protection. Then they are shocked to find out that they no longer have that protection!
Shop around for a business bank account. Talk to your personal bank first. Many banks offer discounts for multiple accounts. In addition, some banks offer discounts on payroll processing through trusted partners, or other benefits such as credit card processing. It’s never too late to separate your expenses and help enhance your business.