Whether starting as a new business owner or re-evaluating your structure, separating your business and personal finances is necessary. You may have varied goals for each finance type that clash if you club them.
Therefore, opening an online Bank Account catering to each need is necessary. You should avoid falling short of funds to attain your personal or business objectives. Compromising one of them may also lead to losses. Here is a brief on separating business and personal finances:
Personal asset exposure
You should establish your business structure for legal protection as a business owner. Whether a corporation or a limited liability company, your business’s legal structure determines the risk, liability, and tax responsibility. The primary reason business owners set up LLCs is to protect their assets. You can safeguard your assets by maintaining a separate Personal and Business Bank Account.
You should avoid using the Business Account for personal expenses and vice-versa. You can see individual growth in each phase and can better balance your costs and savings.
Taxes
If you blend your personal and business finances, you could run into trouble while filing taxes. While most of your taxable income arises from businesses, there is a possibility you may not be able to separate the components. You may get confused between expenses and paying a higher tax.
Easier bookkeeping
It may seem like a pain to set up a separate Business Account initially, but it can save you time and headaches in the future. Having an account dedicated to your business gives you a clearer idea of your cash flow, and you can easily track expenses. You can also integrate various software to automatically import and categorise business transactions to your Current Account. Download the Banking app for swift and convenient access to both accounts.
Financing
While your business might not be at a point where you require a Loan, you may need to apply for one as it grows. Banks evaluate your business and personal finances. However, if those accounts are not separate, they may have difficulty getting accuracy on your company’s financial status and, therefore, your ability to repay the amount.
Peace of mind
A clear picture of your company’s financial state brings you peace of mind. When your finances are separate, and your bookkeeping is clean, you have a better idea of where you stand. It also ensures you avoid running into unpleasant surprises while filing taxes. You can activate Net Banking separately for each account and operate them whenever required.
Points to note
When you open a Savings Account, check the minimum balance maintenance, eligibility, etc. Upload the required documents on the app and get instant access to Loans, Insurance, account statements, and a linked Debit Card.
Strong businesses grow through careful, incremental improvements. Learning to keep your business and personal finances separate is the perfect place to start.
