Keeping your business and personal expenses separate
As a business owner, the last thing you want to do is complicate your finances. There are many reasons why it’s a bad idea. We’ll explain the main ones for you, as well as the best ways to keep your business and personal finances separate.
Why it’s important
Keeping your expenses separate helps you to be more organised. It makes it far easier to track your business expenses. This means that you when you’re audited by the tax office or the end of the financial year rolls around, your finances will be easier to manage. You will be more likely to save both money and time at tax time.
Separating your business and private expenses can also help you to stay out of financial trouble. You’ll be able to more easily know when you’re spending more than your weekly income. It will also prevent you from accidentally claiming personal expenses on your tax returns, which can incur penalties.
How to do it
The first and most obvious step to separating your finances is to create a separate business bank account. Every transaction from this account should be business-related and every expense will then be deductible at tax time. Use your personal bank account only for your personal expenses.
Some more handy tips are to:
implement bookkeeping software.
keep your business and personal receipts in two separate locations.
How we can help
At Scorpion Bookkeeping, we can help you ensure that your business expenses are separate from your personal expenses. Implementing Xero bookkeeping software will make managing your business finances quick and easy. We are a Xero-certified partner.
We service a diverse range of clients in South Australia, Victoria and New South Wales. Contact us today for a free, no-obligation consultation to find out how we can help!