You’ve made it. You’re running a creative empire. You can work from your couch and use your kitchen as a fully stocked break-room. You can choose to have morning play dates and evening work sessions. This can make the line between business and personal blurry, but there’s one facet of your business where you really need a hard line drawn. Your finances!
There are lots of reasons to keep business and personal finances separate, but these are my top 4.
You’ll have a clearer picture of you financial health
If you have a completely separate business account, you can clearly see how much capital you have in your business, general trends in expenditures and income, and how that is effecting your cash flow all by taking a quick peak at your bank account. Co-mingling your accounts could mean hours of sorting through transactions to see the same trends. It also means you could miss cash flow problems inside your business.
It will save time and money at tax time
Mixed accounts means that you will be combing through statements at one point or another to identify business transactions. As a small business owner, do you really have time for that??? Some transactions will be easy to find because they are always for business and never personal (ex: camera gear rental for a photographer), but other transactions will blend right in to your personal spending (like that amazon purchase you made for office supplies, or the client meeting you took at your favorite local coffee shop). Missing these expenses means you’re not claiming them for your business and that ends up costing you money.
You can pay yourself (and your business)!
Separate bank accounts means you can write yourself paychecks. Not only that, leaving capital in your business gives you the funds to invest it in things that will generate more revenue. The only way to be intentional in both these areas is to keep your business funds separate.
It makes you feel more legitimate
Here’s the deal, when you start taking your business more seriously others will too. It’s time to commit to this business thing and stop doubting yourself. You’re doing amazing things and you’ve got a cool business name, now let’s get it put on a debit card and some checks! But seriously, it’s time.