Quick Bookkeeping Tip #2
Bookkeeping for your small business can be time-consuming, so here is a quick bookkeeping tip to make life easier.
Bookkeeping Tip #2: Keep your business finances separate!
No matter how tempting it may be to pay for your personal expenses from your business account or vice versa, DON’T DO IT!
What exactly is a business expense? A business expense is one that is directly related to the operation of the business. Simple enough, right? It can be simple, but things like meals and entertainment can get tricky.
In the beginning stages of business ownership it can be easy to get into the habit of mixing funds, however, you need to open a business account as soon as possible. Use your newly opened business account to deposit all business money and to pay all business expenses. If the business needs an infusion of cash from you, as the owner, you can do so as an owner contribution. If the business is doing well and you want to take cash out, you can do so as an owner draw. A good practice is to transfer money on a regular basis from the business account into the personal account to cover your personal living expenses.
Not sure if an expense is business or personal? C2 Accounting can help, click here to download our simple guide “The List of Common Business Expenses“.