Whether you are a blogger, freelancer or budding online entrepreneur, it’s important to separate your business banking from your other personal finances. When I first started blogging, I didn’t think about starting a separate bank account just for my blogging business endeavors. However, as I began to earn some income and have blogging related expenses, I quickly realized that it’s virtually necessary to separate those finances.
There are a number of advantages to having a separate business banking account. The most obvious advantage is having a clear separation from your other personal finances.
Keeping a completely separate business bank account allows you to easily track your business expenses against your business income. Aside from simply keeping track of your sources of income, this comes in really handy come tax time.
When I first started seeing money trickle in, I had to sit down and spend time sorting through my personal bank account to figure out what expenditures were business expenses and which ones were my own personal spending. It was a pain to figure out my deductions.
After that first year, I started separating my finances and using a separate account only for business banking. This way I could simply pull my statement for the business account and easily track my business expenses.
The other advantage that I found with separating my finances, is that I am able to budget better, particularly when I have to account to the times when business is slow. I keep a balance in my business account of my business earnings. That way I always have enough money to pay my operational expenses even when business is slow.
Generally, this means that I am able to balance out my household budgeting without having to rely on my business income. At the same time, I have money in my business account, so that I don’t have to worry about coming up short on any given month. I don’t need to transfer money out of my personal account to pay for business expenses. It’s a great practice to keep my money from getting co-mingled.
If there is any concern that the money that is held in your business account is not working for you as an investment, you can always invest in a business savings account to earn interest on your savings. You can keep your money in a business savings account, just as you might in your personal savings account.
The one downside is that a business savings account typically earns lower interest than a personal savings account. However, I believe that the difference is negligible compared to the added benefits of being able to clearly separate your income.
Finally, when you maintain a business banking account for your business transactions, you give your business a professional aura. Your checks will have your business account information, rather than your personal information. When people pay you, they will be paying to your professional business account rather than just transferring money to your personal account.
There are a number of benefits to having a business banking account that every freelancer, blogger, and online entrepreneur should consider.