Benefits of Separating Personal and Business Finances
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You are a business owner.
As the owner, you’ll make countless decisions. However, none are more foundational than the choice to run your business as a business, not a hobby.
That starts with your finances. Whether you’re a sole proprietor, an LLC, or an independent contractor, the last thing you want are murky numbers. Here are five reasons you should create a clear separation between your business and personal banking.
Cash Flow
Equipment upgrades. New property. Business trips. All of these opportunities, and many more, are tied to your cash flow. That’s why it’s important to know where your business is financially.
However, if your personal and business finances are combined, that picture is anything but clear. This could result in missed opportunities because you unknowingly underestimated or overestimated your finances. . You can’t make the best decision for your company when you don’t have all the information.
Taxes
Paying taxes is no business owner’s favorite responsibility, but it's necessary. With a little planning, you can make it through tax season without breaking a sweat.
That becomes a much bigger challenge if your finances are mixed. It can also be more difficult to deduct business expenses, which could result in you paying more in taxes.
Liability
No business owner expects to face legal action, but it happens. You want to be prepared. This is one of the primary benefits of forming an LLC. If your business faces legal issues, your personal assets are protected.
If your business and personal finances are merged, your assets could be in jeopardy.
Mindset
Opening a business account isn’t just important for your dollars and cents. It may also improve your mindset. This can be especially important in the early stages.
Having a business account provides confidence in yourself, your product or service, and your business. After all, hobbyists don’t have business accounts. You’re the real deal. Treat your business as such.
Services
The benefits of opening a separate business account don’t have to stop with the account itself. Depending on your financial institution, you could get access to other services and solutions:
Merchant services
HR & payroll services
Business loans
Business credit cards
That’s why who you bank with is so important. With a partner like Member One, your business is equipped to succeed.
Member One is committed to helping your business flourish and getting started is easier than you think. If you have any questions, please contact us today at businesssales@memberonefcu.com.
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