Cash flow problems go undetected when owners mix their own personal finances with their small business’ finances. This practice is very common among start-ups and is detrimental to your business.
Your First Order of business is to:
- Open a separate bank account for your business!
It may seem an expensive option at the beginning to be paying fees on two separate bank accounts; however you can claim the running costs of your business bank account as a business expense .The same applies to a separate credit card. Even if you have another credit card in your private name and only use it for the business expenses.
Always request a statement with a month-end cut-off date. This will make it easier for you to reconcile your statement and track expenses.
In order to open a business bank account, most banks will require proof that you have registered your business name with the Corporate Registrar’s office.
Deposit All Your Income. It can be tempting to pay expense from cash receipts But don’t – Be sure to deposit them into your business bank account and pay expenses separately from your business bank account.
Don’t mix your personal expenses with your business expenses. An example of this is when you buy fuel; if you happen to buy milk or chocolate pay for them in separate transactions. You need to make sure that you have a legitimate business expenses and keep those personal items separate.
Dianne Mueller, CPB- Certified Professional Bookkeeper
Gold Level Simply Accounting Consultant & Trainer
Soma Small Business Solutions