April
It’s pretty easy for a lot of people to mix up their personal and business expenses. It doesn’t really matter what type of business you run, it’s still a great idea to keep your own personal money separate from your business money. The most important thing to remember is that it’ll make it easier to tell the two apart when tax time rolls around, and it’ll make it easier for your business to blossom or even sell it down the road.
Remain calm if you haven’t separated your financials, you still have time to get it together.
Seek professional advice
If you believe that you’ve misclassified a business expense for a personal one or all this financial stuff is too overwhelming, seek out a pro. A pro will create a system for you to follow that’ll work for your own unique situation. It’s well worth the money to pay for the services of a highly experienced and recommended individual.
Have two different bank accounts
If you have two different bank accounts and you’re meticulous about using the right account for the right purchase, when tax time rolls around, all you have to really do is check your bank statements to understand what’s going on. If you only use your business debit card and you stay away from cash, you could even do your own taxes right off the statements.
Track business use
If you use something personal, maybe your van or your smartphone for business, track your usage down to the penny. Sure, everything would be easier if you could use it just for business use only, but if that’s not on the table right now, there are a lot of tracking tools to use, especially for your HTC Evo 4G.
Save your receipts in plastic containers
You don’t really need to save your receipts in plastic containers (actually, something that fits to your tastes is ideal), but whatever you decide to use it should easily remind you which container is for which. If you don’t have the time to save and organize all of your receipts, organize your business receipts first. Auditors don’t really care about your personal expenses, but they have a vampire-like bloodlust for your business receipts.
Differentiate home and office
Create a distinct division between your home and office, especially if you work from home. By doing this, you’ll be able to claim a home office deduction as well as split up bills. It doesn’t matter if you work from home, your business shouldn’t pay all the bills for your house. At least a certain percentage should also rest on your personal behalf.
Maintain a budget
Just as you don’t want to draw out more money from your business than what it can afford, you don’t want to draw more out of you than you can afford. Lots of business owners have a tendency to use money from their personal bank accounts to fill in the business gaps. And sometimes it’s mandatory. But if you already have a budget in mind, you can help avoid a complicated situation down the road.
Know what a business expense is
The biggest downside when it comes to finances is to keep all the fun stuff separated. I know it’s alluring to write off everything you can as a deduction, but the honest truth is that meals out with family and friends don’t count as business expenses, no matter how you make it sound.
