You might have started your small business with your savings. You could even have taken a business loan using your personal assets as security.
However, as your business grows, it becomes necessary to create a clear line between your personal and business finances. Doing so makes it easier to control costs of your business, to prevent tax evasion, to calculate essential ratios, and also protect your personal assets from being seized if things turn sour!
Ways To Separate Your Personal And Business Finances!
Use these tips to separate your personal and business finances!
- While maintaining two separate books of accounts would be difficult and prone to errors, it is essential to classify heads of accounts to keep personal and business finances separate!
- Maintain separate bank accounts and credit cards for your personal needs and for your business.
- Fix a particular amount to be withdrawn every month from the business as salary.
- Hire an accountant to guide you through classification of expenses, accounting treatments, tax impacts, etc.
You could also use a computerised accounting system to sort your personal and business accounts.
For small business loans, get in touch with Gromor!