The idea that you are now (or soon to be) your own boss is music to the ears. You’re finally on the driver seat; no need to follow silly company rules, deal with an unreasonable manager, and stay unheard with your bright ideas. You now write checks, employ someone, have full control of the regulations—the captain of your ship.
After all the excitement, the reality eventually sinks in: running a business is serious work. You need to wear many hats, and change your ways to become a successful entrepreneur.
One of the first things you must do is to separate your personal and business accounts. Why? It may be convenient to access all of your money and thrilling to see how your wealth builds up in one giant account, but you should veer away from this practice because:It’s Unprofessional
When you need to make payments through check, it’s your company doing the transaction, not you. They wouldn’t complain with the money, but other businesses might consider this a huge turn-off if they see your name there.
If you want to be called a bona fide entrepreneur, put a premium on professionalism.It Might Cause Tax Deduction Problems
The IRS is clear when it comes to deductibles, but how can you easily determine your business expenses if they’re all mixed with your personal expenditures. Not only that, how can you convince the government that you’re really running a business, which is eligible for certain tax deductions, if it’s hard to tell your transactions apart.
Simply opening a business bank account allows you to get a dozen of deductions you can legally write off.It Makes Auditing a Living Hell
If you are going to be checked by the IRS, it might not help your cause if you can’t provide a clear audit trail. Auditors require all of your business records to be accurate and permanent, showing a clear-cut history of your income and expenses.
Owning a business involves unique pleasures, but there are serious responsibilities you need to fulfill. Open a separate business account and strictly use it for all of your transactions, and you can avoid almost every problem you might encounter.