Drawing a Line, or Why You Should Keep Your Business and Personal Finances Separate

 Don't take a hammer to your business's finances...
Don’t take a hammer to your business’s finances…

When I meet with a small business client for the first time, one of the questions I ask is “Do you have a separate business account?”  Many times the answer is NO, and that drives me crazy.  I stress the various reasons that keeping finances separate is pivotal, like the fact that the IRS could disallow all of your business deductions if they see that you are co-mingling funds. You also don’t want your monthly financial statements to show grocery bills and lingerie purchases (unless this is your line of business). Practices such as these reflect the “piggy-bank” syndrome that some business owners have, living off of their business revenue and leaving nothing for the business to live off of! The article linked above provides more compelling reasons why keeping your money separated makes good sense for your business, and, if it keeps you from trouble with the IRS, your peace of mind.

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