If you’re a small business owner, you know that there aren’t enough hours in the day to do everything you want to do for your blossoming venture. It’s up to you to run sales, marketing, advertising, and customer service, not to mention financial management and bookkeeping. You’re everything rolled into one, and it can be downright overwhelming at times.
Although you might not want to admit it, you know that the lines get blurred sometimes between your personal and professional life. After all, your small business takes up MOST of your time. That’s where murky waters between your personal and business finances can develop. When there are only so many hours in the day, you try and knock off two things at once, pulling from your personal funds to augment your professional venture.
However, we’re going to look at 4 reasons why you want to keep these two financial troves separate – trust us!
1. Sustained Professionalism:
The very image of your small business is the revenue that it pulls in on a yearly basis. Your business is more than a hobby, which is why your finances should be treated as such. Keeping personal and professional money separate will help you carve out a business identity that is respectable and professional. Let’s say someone wants to acquire, invest, or partner with you. What will your books show them?
2. Taxation Compliance:
Everyone knows doing business tax in the U.S. is anything but a walk in the park. Keeping your personal finances out of your professional finances will provide you with tax deduction advantages, including writing off business expenses. Ensuring you have a clean-cut record of these finances for your accountant will help them secure the greatest number of deductions and other tax advantages that will lower what you owe the IRS (within legal reason, of course).
3. Business Loans:
Every small business faces that point in which expansion is only possible through loans. If you want to secure loans with the best terms available, you need business credit that shows banking agencies you are a serious and respectable entity. Blurring personal and professional finances will make them weary of your reliability.
4. Saves Time & Money:
If you have to piece apart different finances at the end of every fiscal year, you are wasting dozens of hours, and paid money to accountants, to do this kind of separation. If you just manage to keep it all organized the first time, you will gain back a ton of productive time you can now put towards your small business.
We know it’s always easier said than done, which is why we offer a CRM software that makes it simple for you to keep your finances organized. With every tool you need, centralized in one place, now you can know every last financial detail without blending any accounts by accident. It’s important for the future of your business!