Keeping your personal and business expenses and finances separate when starting a business is essential to how your company operates and how it is perceived by the corporate world when you are looking to finance or sell your business.
Keeping your assets shielded from any business claims is imperative; otherwise, you may lose everything if your business has to fail at any stage.
Business is business
Your business is a separate entity and needs to remain that way. There are some critical reasons why you need to keep them isolated from each other.
Looking professional by having a business bank account instead of asking clients to pay you into a personal bank account is much better. It makes you look like a professional entity and not some fly by night.
Establish your business identity and payments track record with creditors, as this will impact any financing options down the line.
A significant reason to keep all personal and business finances and expenses separate is for tax and tax deductions. Blurring the lines can cause issues when you are trying to establish your business value and profit.
Ensure you pay yourself a salary and keep your personal expenses out of business.
If you are smudging these lines too much, you may find yourself being audited in both the business and personal capacity.
Establishing your business as a profitable entity is crucial when looking to get credit, loans, payment terms, or down the line, looking to sell your business as an asset.
You may ‘know” that your business makes money, but if you live your life out of the business bank account, it is not reflective of that.
To speak to one of our consultants on business loan requirements for your business, please get in touch here: https://bizcash.co.za/contact-us/
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