Owning a small business has a number of challenges and obligations. One of those obligations is the important task of separating your business vs. personal expenses year in and year out. Separating your expenses not only helps to showcase the professionalism of your small business and provides you with the peace of mind you need should you ever get audited by the IRS, but also reduces any legal liability for you and helps to save you both time and money. Here at Tax Alternatives, our dedicated team of professionals wants to share some useful tips on separating your small business expenses from any personal expenses you incur.
USEFUL TIPS FOR KEEPING PERSONAL AND BUSINESS EXPENSES SEPARATE
- Start by Creating an Entity of its Own for Your Small Business – The structure of your small business or the entity you choose plays a significant role in all your accounting needs as well as in identifying the type of income tax returns you will be required to file each year. Creating a separate entity for your small business helps to showcase your expenses and all other elements of the business.
- Open a Separate Business Bank Account – Once your separate business entity has been created, you will need to open up a bank account for your business which helps to define the operation of your business as such and not just a hobby or other presence. Your business bank account allows you to keep accurate records of all transactions relating to your business by way of your bank account statements. With a separate business banking account, you are sure to experience much less stress come tax time or if ever you find yourself being audited by the IRS.
- Open a Separate Business Credit Card – As a small business owner, you want to ensure that you use a business credit card for all your business-related purchases and transactions. This helps to create your business financial identity since a credit card for business purposes only is an ideal tool to increase your company’s purchasing capabilities and to build healthy credit for your small business.
- Compensate Yourself with a Salary – As an employee of your own small business, it is important that you pay yourself a reasonable salary that would be dependent upon your many responsibilities. Here at Tax Alternatives we highly recommend you perform your own due diligence and locate salary ranges within your own industry for similar tasks being performed.
LEAVE IT TO THE PROFESSIONALS HERE AT TAX ALTERNATIVES
Keeping your business vs. Personal expenses separate can surely be time consuming and otherwise quite a challenge, especially in light of the abundant other tasks and responsibilities you, as the small business owner, are engaged in each and every day. If you prefer to give primary focus to strategic planning, increasing your client base and a variety of activities for revenue generating purposes, then perhaps it would be best if you were to transfer some of the other tasks to a team of dedicated experts. That is where the professionals here at Tax Alternatives come in. Our team is steadfast in their efforts to not only help our clients free up their time to focus more on a number of value-added activities, but also providing our clients with the highest quality products and services this side of the state.
Our team of specialists are on hand to help provide you with tailored solutions that not only support small businesses but are beneficial to budgets as well. We save you both the time and hassle of performing bookkeeping and accounting tasks, including the separation of business vs. personal expenses. When you rely on our team of experts to perform these tasks you can then use that time to scale your small business with a whole lot more ease. Don’t delay. Contact the professionals here at Tax Alternatives today!