Small Business Accounts
Using a personal bank account for business is common among part-time business such as multi-level marketing and self-employed sole proprietors.
Venturing into the world of entrepreneurship is risky. There are those however who lessen the risk by starting small while retaining their full-time income for financial security reasons.
Most of the times, entrepreneurs try to process business transactions through their personal bank accounts, in an effort to lessen expenses and bank fees. Unknowingly, they are creating more potential problems for their business in the near future.
There are 5 reasons why it is not advisable to mix Personal and SB accounts:
Hobby Business- Government rules specifies that only businesses can deduct business expenses. A personal bank account will create a hard time to convince the government that you’re operating a business.
Tax-time nightmare-It will be a nightmare when taxing time comes, a burden going through all the transactions and figuring out which is business from personal transactions.
Limited Audit Trail-It is required by the government that all records be accurate, complete, permanent and shows a clear record of every income and deductions. Providing a separate business statement and record provides a clear audit trail.
Missed deductions- there may be times that miss deductions will be overlooked, whether you or an accountant is the one preparing the tax return. Costing you time and money.
Lack of Professionalism- It will convey a different kind of message to your clients; they’ll think that your business is just part-time. That soon will lead into backing out to whatever transactions they have with you.
It is therefore important to open a SB accounts to simplify your record keeping. It varies in fees and features and the cost of SB accounts are far more beneficial to your business.