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Separating_Business_And_Personal_Finances

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					Title:
Separating Business And Personal Finances

Word Count:
626

Summary:
Money management is one of the most difficult tasks that a small business
owner must face. In the early days, you may have a very uneven income
stream, putting out personal funds for startup expenses and operating at
a loss. As your business grows, it may become your primary source of
personal income. Especially if you work alone or have only a few
employees, it is easy for your business finances and personal finances to
become intertwined. However, for many reasons, it is im...


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Article Body:
Money management is one of the most difficult tasks that a small business
owner must face. In the early days, you may have a very uneven income
stream, putting out personal funds for startup expenses and operating at
a loss. As your business grows, it may become your primary source of
personal income. Especially if you work alone or have only a few
employees, it is easy for your business finances and personal finances to
become intertwined. However, for many reasons, it is important that the
two remain separate and distinct. Provided here is a guide to separating
your finances.

Why Should I Separate My Finances?

The most important reason for separating your business and personal
finances is for tax purposes. You may be entitled to certain deductions
for your business, such as expenses for your home office and a mileage
allowance for your vehicle. Many of these deductions are not available to
individual taxpayers, only to businesses. Likewise, you may be
responsible for paying certain taxes on your business that do not apply
to your personal income. Separating your finances is the only way to
ensure that you properly follow all tax laws and receive all advantages
to which you are entitled by law.

Another important reason for separating your finances is the development
of a paper trail. If you need to obtain money for the business through
grants or loans, you will be expected to show certain financial reports
that demonstrate the business’ performance. If your finances are
separated it will be much easier to determine which income and expenses
belong to the business itself.

Separating your finances can help you decide how best to grow and develop
the business as well. You will be able to see the areas in which the
business excels as well as those areas in which it needs some extra help.
You can generate targeted, accurate reports and financial statements that
show at a glance how the business performs in various areas.Painless
Billing

How Can I Separate My Finances?

The easiest way to separate your business and personal finances is to
open a business bank account. If you use credit to make business-related
purchases, apply for a card in the name of the business. Have all
payments made to the business account, and use only those funds and the
business credit card to make purchases.

How Do I Get Paid?

You have multiple options for paying yourself. Some business owners find
it best to write themselves a set paycheck every week. If you are
confident that the business will retain enough funds to pay your salary
each time, this will streamline the process and make it easier to
accurately pay your personal income taxes.

However, if your business is new or unstable, you may find it better to
pass funds through the business account to your personal account. You
might decide to retain just enough money in the business account to pay
for expenses, and transfer everything that is left into your personal
account. This is an ideal solution for those who have many personal
expenses but few business expenses and earn wildly different sums on each
contract.

Setting Up and Maintaining Bookkeeping and Accounting

Many business owners find themselves confused and overwhelmed by the
paperwork that is involved in maintaining separate accounts. Consider
hiring outside help. A Virtual Assistant company such as IAC
Professionals can set up and maintain your bookkeeping and accounting.
Your VA can even handle payroll, writing your paycheck each week. You can
maintain as much or as little control over the process as you desire. You
can hire the VA for a set number of hours per week or per month, or
simply retain his or her services on a per-project basis.

				
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