While owning your own business has become a dream come true, it comes with many financial aspects to consider.
From taxes to building credit and getting the most out of your time, keeping business and personal finances separate tops the list of to-dos. Three ways to make that easier include:
1. Structure your business
A solid business structure enables you to follow tax-related guidelines. You have many options when it comes to a business’s structure, including sole proprietorship, LLC and corporation. Each one comes with its own unique elements. Many people choose an LLC format, which often offers an easy way to keep personal and business separate.
2. Stay organized
If you run a small company, you may feel like you have your hands full of receipts and other vital paperwork. While tossing them all together offers an upfront ease factor, you will likely regret that decision come tax season. Develop a strategy to keep business receipts separate from personal ones. The right system should provide easy accessibility and eliminate confusion.
3. Get a business bank account and credit card
Instead of dealing with the hassle of figuring out which receipts apply to what, set your business up with a bank account and credit card. This not only helps you keep things separate but also has the long-term benefit of establishing a solid relationship with a financial institution. When it comes time to grow, you may find it easier to a loan or additional credit.
As you build your business, establishing good habits from the get-go makes it easier to handle tax season.