Once you get your first payment and start making money, you should think about keeping personal and business finances separate. This will not only help you to stay organized but also make your work easier when it comes to filing tax returns. Here are a few tips to help you with this process. 

Open a Separate Business Checking Account

It will be difficult for you to keep personal and business finances separate if you still keep all your money in the same bank account. This is why you will need to open a business checking account through which you can manage your revenue and expenses. In case you do not meet banks’ strict requirements for opening a business checking account, you can open another personal checking account. This will help you manage your finances as your business grows. 

Get a Business Credit Card

After opening a business checking account, you should proceed to get a business credit card. Using your personal credit card to make business-related purchases will still get your finances mixed up. Since there is a good chance that you have built your credit score over time and you can access loans and mortgages, you should also focus on building your business credit score so you can access finance for expansion and purchase of equipment. Through a business credit card, you can pay for business expenses from the business checking account and keep your personal and business finances completely separate. 

Pay Yourself a Salary

If you are making a reasonable amount of money from your business, you should consider paying yourself a salary. This will help you to cover your personal expenses without draining business revenue. Having a personal and business budget will help you to determine how much you need. However, you should make sure you have enough left to pay taxes and meet important business expenses.

Set Up Automatic Transfers

Keeping personal and business finances separate will require that you have savings for the business. In this way, you will avoid withdrawing funds from your personal emergency fund when you incur unforeseen expenses.

Although keeping personal and business finances separate is difficult, it pays off in the end. Kindly contact Simplicity Capital Finance to learn more so you can focus on building your business and making money.