Keeping business and personal finances separate is critical to clear accounting and reporting. Yet, it can be a challenge, especially for owners and managers of small, family-run businesses. Here are some tips that can help you keep them apart.
Establish Business Accounts
If you haven’t already, set up savings, checking, and credit card accounts in your business name. Most banks will require an Employer Identification Number from the IRS before they will open a business account, so be sure to have that first. Put all receipts from the business into one of these accounts and pay all of the expenses from them.
Hire a Qualified CPA
Unless you are trained to work with them, business accounts can quickly become overwhelming. That can lead to lax accounting procedures and muddled accounts. Hire a CPA that is experienced with your type of business. The United CPA Association can help you find one to help keep your records in order.
Keep Detailed Records
No matter who is handling your accounting, you will want to have detailed records. Be sure to save them for the recommended length of time, which is usually listed as seven years.
While it may take a few extra steps, keeping your business and personal finances separate throughout the year will make it easier to sort through them at the end of the year. If you are unsure about where to start, consider reaching out to a representative from the Small Business Association for guidance.