Your business life and your personal life are bound to run together; you hit the gym on your lunch break, grab a meal with your client, and buy your boss a friendly holiday gift. However, it’s important to separate the financials of each facets of your life – it will save you a lot of headache during tax season. Below are three ways to make sure the monetary lines don’t get blurred.
If you have expenses to report to your employer for reimbursement, and/or know you will have to report them to the IRS, an easy fix is opening a separate checking account, so your business lunches don’t get lost in the mix of your day-to-day transactions. Many of the big banks offer business checking accounts, especially for small business owners, often with no monthly or annual fees and a high number of free transactions. Come tax time, you can leave the highlighter alone – you’ll only have one account to look at, and all transactions will be relevant.
Not lost upon many companies, a business credit card is key. Like a checking account, all of your business transactions are in one spot when it’s time to claim those expenses. What’s more, business credit cards often come with great rewards like cash back and travel bonuses – favorites across industries include cards from American Express, Citi, and Capital One. Just make sure to not mix this up when reaching to pay for your family vacation.
Although tedious, keeping digital copies of your receipts and organizing appropriately all year long will help you get the ball rolling before April. Get creative with how you organize – use Google Drive to create folders for specific dates, projects, clients, etc., or your company’s internal system. Use spreadsheets to help with tracking monthly expenses with descriptions and running dollar amounts. Then, scan receipts via the office fax machine, or use a smartphone app.
Along with the perks that come along with a business checking account and a business credit card, having both will minimize your chances of needing to use cash for things you’ll need later. Of course, this is sometimes unavoidable, which is why the importance of staying organized with your receipt-keeping is pertinent.
Rivers may run together, but don’t let your finances. When tax season hits, you’ll have all the numbers already crunched.
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