If your firm's startup capital was sourced from your personal savings, there's a good chance that you run all your funds through the same bank account. While there's nothing wrong with the first part, the latter could be your first step towards self-destructing. Without a separate business bank account, tactical money management will be impossible to achieve. And this isn't the only reason why you should implement a financial division.
Ever spent hours combing through your bank statements when filing your tax returns? This is often the result of mixing both personal and business funds in the same account. In such a case, it becomes hard to keep track of deductible expenses, which in turn creates the risk of inviting tax auditors. Such headaches are best prevented by splitting finances and proper book-keeping.
You already know how important it is to maintain a professional image out there. What you might not be aware of is that merging all your finances under the same umbrella won't help this cause. Having your customers make payments to your personal accounts will make them start doubting your professionalism. For them to start taking you seriously, there has to be a clear boundary between you and your firm.
One of the benefits of structuring your business as a corporation is the shield that this status provides to your personal assets. For this to work, you have to separate them from those owned by your company. Otherwise, any action filed against your company by creditors will expose your wealth to forfeiture.
Easy access to financing is one of the ingredients your company needs to achieve sustainable growth. While it's possible to borrow based on your personal profile, a separate business credit history will be mandatory to secure larger loans. Detaching your business and personal accounts now will not only establish this, but also make it easier to prove that the venture can succeed without relying on your own resources.
In an ideal scenario, a quick scan at your bank statements is all you'd need to figure out how your business is fairing at any time. This is easier said than done, but what's indisputable is the fact that it'd take at least a week to do the same if your finances are merged. Remember that it's your responsibility to spearhead decision making and maintain forward progress. Knowing that you don't have any personal transactions interfering with your accounts will not only make this easier, but also lessen the workload for your accounting department.
Even the most profitable venture will come tumbling down if its shareholders use it as their personal cash register. As you've probably guessed, this is more likely to happen when you and your company's lives are financially tangled. In such a case, chances are that you'll use your personal funds to bail out your company or vice versa. Either way, success will be hard to come by.
The idea of managing your cash in the same place as your firm's finances might sound convenient, but it's one that's littered with numerous pitfalls. Setting up a dedicated bank account for your business will be a step in the right direction as far as your success is concerned. While this means you'll have more accounts to keep track of, the long-term benefits of this move will more than make up for your efforts.
Ever spent hours combing through your bank statements when filing your tax returns? This is often the result of mixing both personal and business funds in the same account. In such a case, it becomes hard to keep track of deductible expenses, which in turn creates the risk of inviting tax auditors. Such headaches are best prevented by splitting finances and proper book-keeping.
You already know how important it is to maintain a professional image out there. What you might not be aware of is that merging all your finances under the same umbrella won't help this cause. Having your customers make payments to your personal accounts will make them start doubting your professionalism. For them to start taking you seriously, there has to be a clear boundary between you and your firm.
One of the benefits of structuring your business as a corporation is the shield that this status provides to your personal assets. For this to work, you have to separate them from those owned by your company. Otherwise, any action filed against your company by creditors will expose your wealth to forfeiture.
Easy access to financing is one of the ingredients your company needs to achieve sustainable growth. While it's possible to borrow based on your personal profile, a separate business credit history will be mandatory to secure larger loans. Detaching your business and personal accounts now will not only establish this, but also make it easier to prove that the venture can succeed without relying on your own resources.
In an ideal scenario, a quick scan at your bank statements is all you'd need to figure out how your business is fairing at any time. This is easier said than done, but what's indisputable is the fact that it'd take at least a week to do the same if your finances are merged. Remember that it's your responsibility to spearhead decision making and maintain forward progress. Knowing that you don't have any personal transactions interfering with your accounts will not only make this easier, but also lessen the workload for your accounting department.
Even the most profitable venture will come tumbling down if its shareholders use it as their personal cash register. As you've probably guessed, this is more likely to happen when you and your company's lives are financially tangled. In such a case, chances are that you'll use your personal funds to bail out your company or vice versa. Either way, success will be hard to come by.
The idea of managing your cash in the same place as your firm's finances might sound convenient, but it's one that's littered with numerous pitfalls. Setting up a dedicated bank account for your business will be a step in the right direction as far as your success is concerned. While this means you'll have more accounts to keep track of, the long-term benefits of this move will more than make up for your efforts.
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