It doesn’t matter whether you’re just starting out in your health and wellness business or if you’re well-established, you must strive to keep your business and personal finances separate. It’s not always the easiest thing to do but it certainly is necessary. Now is the time to get your finances under control.
Here are 7 steps to help you separate your business and personal finances:
Register your business to make it official. You must validate your company by establishing it as an official health and wellness business, meaning you should have it registered as either an LLC, S Corp, or C Corp. It’s in your best interest to hire a legal expert for their assistance. They will have a better understanding of the structure of your business and therefore, they will know what kind of authentication you should register for. Authenticating your business will safeguard you from potential legal issues such as lawsuits and debts.
Open a bank account for your company. Keep two separate accounts for your personal and business finances. When you need specific information from one of your accounts, you will find that receiving separate statements from each one makes it much easier to find what you’re looking for.
Establish business credit. To avoid using personal credit or debit for company needs, apply for business credit and debit. Having business credit will also make it possible to put in requests for loans and other perks if you need them later down the line.
Don’t forget to pay yourself! Make sure you’re writing yourself checks. Whether you pay yourself weekly or biweekly- make it happen! You are working much too hard not to earn a paycheck. Transfer the money you pay to yourself to your personal bank account just as you would have it direct deposited for an employee.
Manage and keep all of your receipts. It’s important that you keep personal and business receipts separated. Therefore, have strategic filing arrangements for both business and personal receipts. Don’t just rely on bank statements. If you ever need to provide proof to the IRS, you’ll have all the proof you need, all ready and organized.
Keep track of all your business expenses. Since a large portion of your business expenses are tax-deductible, it means that you can write-off items such as flights, meals or coffee with coworkers, office supplies, and other expenses that were accrued due to your business. Personal items such as phones and vehicles that may also be used to assist your business can also be written off. It’s best to hire a financial advisor to handle personal and business finances. You’ll be thankful you did come tax season.
Make sure your employees know the difference between business and personal expenses. Everyone that you work with should be on the same page, meaning that they should also know to keep personal and business finances separate.
You must remain cognizant of the separation and organization of personal and business finances. Of course, hiring an experienced business money manager can be extremely helpful but if you have the time and patience, you can also manage to do it on your own.
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