Personal Finance

How to separate Business and Personal Finances

personal-finance.

One of the most stressful parts about being a business owner is figuring out how to financially separate your real life and your professional life. As a full-time writer and speaker, I initially struggled to figure out how to draw down a salary and reinvest in my business on a variable income.

More importantly, I needed to understand the difference between the tax deductions available for my personal life and my business expenses. Here’s what helped me start effectively managing both.

Related: Top 7 Basics of Personal Finance Management

Keep your personal and business finances separate

The real key to managing your business expenses and your personal spending like a true boss is to keep your business finances and personal finances completely separate. Not only is separation helpful if the IRS ever comes knocking for an audit, but it also is great for your sanity.

Get started by opening bank accounts for personal and business use. Next, open a business credit card so that you can keep business transactions off your personal credit card. Avoid making purchases for personal affairs on the business credit card and vice versa. That way, you can scroll back through the business credit card statement and easily make note of business expenses.

Be careful not to confuse business and pleasure

Yes, you can often deduct the cost of entertaining clients or employees as business expenses. That includes both meals and fun activities. There is a fine line, however, between conducting business through wooing potential clients and just trying to invent a business expense on something you personally wanted to do.

Be sure to always keep your receipts if you plan to write something off as a business expense. You should also mark it on your work calendar and keep track of invitations, official guest lists, or RSVPs. That’ll help you further prove the legitimacy of expenses if the IRS asks for more confirmation.

 


kennedy

Administrator


Sorry! The Author has not filled his profile.

Total Posts: 0

×


kennedy

Administrator


Sorry! The Author has not filled his profile.

Latest Posts
  • Impact of COVID-19 on Food Security and Livelihoods in Kenya
  • How Covid-19 Reinforces the Significance of the Agriculture Sector
  • Scholarships for Secondary School Students in Kenya

Comments (10)

  1. exceptional content, i love it

  2. Sweet site, super style and design, real clean and utilize pleasant.

  3. Wow, marvelous blog layout! How long have you been blogging for? you make blogging look easy. The overall look of your web site is fantastic, let alone the content!

  4. I am often to blogging and i really appreciate your content. The article has really peaks my interest. I am going to bookmark your site and keep checking for new information.

  5. Real nice style and good subject material, practically nothing else we require : D.

  6. Usually I do not read article on blogs, but I would like to say that this write-up very forced me to try and do so! Your writing style has been amazed me. Thanks, very nice post.

  7. Muchos Gracias for your blog article.Really thank you! Keep writing.

  8. Way cool, some valid points! I appreciate you making this article available, the rest of the site is also high quality. Have a fun.

  9. appropriate post

  10. Fantastic website. Plenty of helpful information here. I am sending it to several friends ans also sharing in delicious. And of course, thanks on your effort!

Comment here

instagram default popup image round
Follow Me
502k 100k 3 month ago
Share