Not many people planning to open their own business are convinced that it is better to keep business account separated from their personal accounts. I have heard many of my friends using their personal checks when having to pay for a business transaction instead of using business checks. They don’t even have business checks thinking that it is useless to have another series of check books when they already have one included with their personal account.
But in one of my business management classes I have learned the importance of having business checks separated from the personal checks. If you have just opened your own business and have hired an accountant to do the bookkeeping, they will tell you the same: always have a business check created separately and never mix personal stuff with business stuff.
Find down below the reasons why business checks are necessary:
- It can help with keeping track of transactions. This means that personal transactions should be monitored and run separately from business transactions. For instance, how can you tell how much you have invested in the business and how much is the expenditure on your personal needs?
Let’s put it this way: when you need to file for annual taxes, how can you know which expenses have been done for the business and which ones for the personal living? Not to mention that some expenses that you do for the company can be deducted from the taxes and if you don’t keep records of these ones separately you won’t know what exactly is deducted and what is not.
- Another reason is that business checks appear to be more professional when handed over to the business partners and suppliers. What would you think of a business man presenting you a personal check when you are involved in a business transaction? It does look unprofessional, right?
Aside from this, whenever you have to pay for business transactions with a personal check will appear as if your company is not a very stable one and as a result you and your business can lose suppliers and their business as well. Not to mention that for a business man who has been in the business for some time you can appear as one who has just started up a home based business or something of the sort.
Bottom line: having a business check is better than keeping your personal money mixed with the business income especially if there is an extra income that adds up to the account. Once your spouse has access to that account, she or he can always get money from the business funds. So, make sure that you manage the business money separately from your personal money. It can also ease up keeping track of the company’s finances.