Your Business Checking Account

This seems simple enough, but having done enough bookkeeping, it needs to be said. Have a separate checking account for your business. All money the business makes should go into the business checking account and all expenses should be paid from the business checking account.

This alone keeps your bookkeeping much simpler, much easier, and much more accurate. Nothing makes things a nightmare for you and your bookkeeper (who will charge you accordingly whether they tell you or not) than messy finances that mix personal and business transactions. Oh, and YOU have to tell your bookkeeper what’s what, so it’s a lot of work for you too.

Not depositing all the money is asking for trouble. Some people do it to avoid the taxes, which is illegal. But what really catches up with them is the lack of documented income. Want to rent a place? Buy a home? Get a loan? Not being able to prove your actual income will only make all of these much harder on you. At best, you’ll pay a lot more in interest. At worst, you’ll be denied outright.

Mixing your personal and business finances also pierces the veil of protection that the business provides. This means it can put all of your personal assets at risk for any liabilities the business owes. Yes, people have literally lost their homes and everything in the bank because of this.