Personal Finances And Separating Your

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					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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