You’ve finally gotten the courage to start your own business – congratulations!
It takes so much determination to even reach this point, and you should be proud of this moment in your life.
When your business is brand new, you may not think it makes sense to keep your business and personal money separate. In some cases, experienced business owners think the same thing.
But this line of thinking couldn’t be more wrong. Here’s why:
Having a separate business checking account can make the business seem more “real.”
Let’s face it – your mindset is 90% of your success as a business owner.
If your brain views your business as a hobby, that’s what it will always be – you will never be able to feed your family with the money from a hobby.
The easiest way to start looking at your new business as such is to open a business checking account.
This doesn’t have to be anything fancy. Look for a bank that offers free checking accounts and incentives for business owners. This doesn’t even have to be a local bank – many banks are able to operate completely online. Find one that meets your needs and set up an account with your business name.
It will give your confidence a little boost every time you open your inbox and find a bank statement addressed to your business.
Having a separate business checking account helps you keep things legal.
Different countries have different governing bodies and therefore different rules on how businesses may operate. However, each one is very specific that your business is separate from you as an individual (in most cases).
When you mix your business and personal transactions, how is your government’s taxing body supposed to know which of your expenses are personal and which are for your business?
In most cases, the agency will assume that ALL of your expenses are personal, leaving you with a higher tax bill for your business.
Since the goal of opening a business is to make money, it doesn’t make sense to give the government more money than you have to.
Having a separate business checking account makes your bookkeeping less of a nightmare.
Imagine for a moment that you have to go through every single purchase you make for your home and your business. Most of us have at least 70 transactions a month for our homes, none of which have anything to do with our businesses. How much time will you waste if you have to go through those 70 transactions in addition to your business receipts?
“When you have to spend 1-2 hours fixing a bookkeeping mess that could have easily been prevented by separating your business and personal transactions, you’re taking time away from your family, running your business, and other things that you want to do.
Your time is valuable and should be treated as such.
So start yourself off on the right foot. Open a business checking account, no matter where you are at with your business.
Once it is open, keep all transactions separate. You’ll thank yourself later, I promise.