So, you’re thinking of starting your own business? Tired of working for someone else, and want to strike out on your own? It’s an admirable idea, but you need to think of a lot of things before you get started – including how you’ll handle your finances.
It’s very important to avoid combining personal and business accounts. It can be very tempting to deposit business cheques to a personal bank account or to charge business expenses to a personal credit card, but these actions can put you at risk. At tax time, it can be hard to sort out what is a business expense and what is a personal expensive – and if you deduct an expense you shouldn’t, it can cost you.
Here are some tips to help keep you on track:
- Have separate bank accounts and credit cards for business and for personal use. Depending on your bank, you may find that there are perks to the business credit cards or accounts you can can’t get on personal credit cards and accounts.
- Keep good records. Make sure you keep track of charges you make for business purposes, since these can be deducted on a tax return.
- Consider professional advice. You may want to consult with a business banker, and tax and legal professionals before you start your small business.
Have you ever started your own business or thought about it? If you have run your own business, what was something you wish you’d considered before you started it?