Keeping your business and personal expenses separate can help you stay organized and provide you peace of mind during tax period. It also makes it easier to manage your finances and greatly simplifies things.
If you don’t know where to start, let’s look at some easy ways to do it. Here are a few tips to help you keep business and personal expenses separate:
- Build Business Credit and Profile
One easy way to draw a clear line between personal and business expenses is to open a business checking account and credit card. In this way, it allows you to segregate business and personal expenses when the transactions occurred and you save time browsing through your bank statements and identifying which transaction is business and which is personal.
2. Streamline Recordkeeping for Tax Time
Maintaining your books or updating your financial records in a timely manner consumes a lot of time and effort, most especially if you are a sole proprietor managing your day-to-day operations. If you are in this kind of situation, tax period can be a real struggle for you.
One of the strategies you can do is hire a professional bookkeeper to handle the recordkeeping for your business. Utilize up-to-date cloud software to keeping and separating your respective receipts for business transactions. This simple practice will greatly help you during tax time and will always give you a peace of mind knowing that your records are properly organized.
You may be tempted to do this yourself, but beware, that bookkeeping is not merely data entry. It requires an understanding of fundamental financial concepts. You may end up spending more money to clean up the messy financial records created by incompetent bookkeeper or by friends, family or neighbor who don’t really know what they are doing.
3. Be IRS Audit Ready
No one is safe from being audited, so you always have to keep all documents to substantiate your tax position or expenses you claimed on your income tax return.
If you need help with bookkeeping and tax services for your company, contact us today at email@example.com or 832-437-0385.