I'm sure as a business owner you have heard people stress the importance of separating your business and personal finances a time or two. But why is that? Why is it so important that you treat the two as separate since you are the owner after all? CB&S Bank has compiled 3 reasons why it is beneficial for you to separate your personal finances from your business finances.
- One reason it is good to separate your personal and business finances is so that people can see that you're serious about your business... If your personal and business finances aren't separated, people may begin to view your business as a hobby or something that you're not completely serious about.
- Another reason to isolate your personal and business finances is the need to build business credit. If you ever find yourself in the position where you need to secure a business loan you are going to need business credit... having your personal and business assets mixed together makes it more challenging to establish your business credit.
- Tax purposes are another important reason to detach your personal finances from your business finances. If your personal finances are still combined with your business then you will not be able to benefit from business tax deductions. Not to mention that trying to sort through your finances during tax time and figure out your personal from your business could be a long and daunting process. Consult a tax attorney for the best advice for your business tax questions.