Separating business and personal finances

1. Obtain an EIN.
2. Incorporate your business.
3. Open a business bank account.
4. Apply for a business credit card.
5. Pay yourself a salary.
6. Separate receipts.
7. Understand the difference between personal and business expenses.
8. Educate other members of your business.

How do you separate business and personal finance?

Though there are many benefits to keeping your personal and business finances separate, two of the main reasons you should draw a line in the sands of finance are for tax and personal protection purposes. It is much easier to keep track of business expenses for tax purposes if you use a separate business account.

Should you separate business and personal?

Perhaps the most important reason to separate personal and business finances is for tax purposes. As a business owner, you're allowed to deduct business-related expenses like travel and supplies. To claim these deductions, you must have proper supporting documentation.

What are the benefits of separating the business and personal assets?

Commingling is mixing your personal funds with your business funds, or using business assets for personal reasons. Although it is more common in small businesses such as LLCs, commingling is a common challenge for any small business owner.