Accounting 101

This assumption requires us as small business owners...

to keep all of our business transactions separate from our personal transactions.

The easiest and best way to so this is to open a business bank account.

Some people think that just keeping separate records is enough in separating business from personal. It is not. You should physically keep your money separate. Some business owners will go as far as keeping their personal and business accounts in different banks.

They said it is better for them as they have to write out a check to deposit instead of transferring between accounts in the same bank.

The main thing is not to pay for personal expenses out of that business account. If you need money from your business for personal expenses write yourself a check or transfer the money into your personal bank account.

One of the biggest justifications for keeping a separate bank account for your business is for clean and accurate bookkeeping.

If you have a separate bank account for all of your business transactions then it will be easier to match and record all of those transactions.

I have even missed recording a few expenses and caught them when I did my bank reconciliation...which by the way is 100 times easier when you have a separate account.

Come tax time, you or your accountant will be happy you maintained separate accounts too.

Also if you were ever audited...you do not want to bring in a bank record that has your personal expenses mixed in. Auditors tend to frown upon that.

Courtesy of BasicAccountingHelp

For more information contact Neikirk, Mahoney and Smith at 502-896-2999