A lot of new business owners commingle their personal finances with those of their businesses. That’s okay…if you’re a bookkeeper. If you’re not keeping categories and reconciling your bank accounts, it may prove difficult.
A lot of stakeholders in businesses — both startups and companies that have been in business for a while — might have a business credit card and a personal credit card, and they frequently forget which one they’re using when they’re out. That used to happen to me until I arranged to have two different color cards. Now it’s easy to differentiate!
Every once in a while something slips through the cracks, but I can always add it to my business reporting, because I know what it is. I might make a mistake once in a while or change my mind later on, but I think keeping separate books is a best practice for anyone looking to do efficient tax reporting.
One of the hardest commingling habits to break occurs when people order from Amazon. Amazon encourages us to setup one default card. This can get iffy if you don’t know which orders are for the business and which are personal. You can stay on top of that by verifying it under Payment Method on the checkout page.
Business owners need to be aware that they can land in hot water from commingling carelessly. Using a business account to pay personal bills is a no-no. When Judith Heft & Associates starts working with a client with that habit, we encourage them to get another card. That includes receiving the new card in the mail for security. To find out what we can do for you to help you keep your books clean, contact us.