Having a home office means keeping up with expenses. This can be really easy or it can be really hard; it all depends on how organized you are. Many people find it very easy to keep business and personal expenses separated, while others rush around a month before their taxes are due, trying to straighten it all out. Don’t be one of those people. Instead follow these tips to keep your business and personal expenses separated.
Ways to Keep Business and Personal Expenses Separated #1: Open another Checking Account
Opening another checking account will make it easier to keep business and personal expenses separated. You do not have to open a business checking account; another personal account will be fine. The key is to make it easier to detect which expenses were business related and which were personal expenses. If this isn’t an option for you, you can always highlight your bank statement, write the check number and date on bill statements, and staple it all together at the end of the month.
Ways to Keep Business and Personal Expenses Separated #2: Get a Business Credit Card
Though am strongly against using credit cards, sometimes it’s unavoidable, especially when you have a business. If you are going to use a credit card, you may as well have a credit card strictly for your business. Many companies offer credit cards, for businesses, that have a lower interest rate and even offer rewards. These will come in very handy if you need to make large purchases for your business.
Ways to Keep Business and Personal Expenses Separated #3: Ring Items Up Separately
One of the easiest ways to keep business and personal expenses separated is to simply ring items up separately. When you go shopping don’t ring up your groceries with your office supplies. This makes it much harder to keep up with your expenses. When you do this, you will have to add up each item that is for the business and then add tax to the total. Obviously, this isn’t difficult, but it’s wasted time.
Ways to Keep Business and Personal Expenses Separated #4: Use Items for Business Purposes Only
When you use a business item for personal use, it makes it hard to determine whether or not that item can be deducted from your taxes. For example, if you use your computer for personal reasons, you will not be able to deduct your computer from your taxes. If you would like to deduct such items, setup a home office and use that space and the supplies for business purposes only.
Ways to Keep Business and Personal Expenses Separated #5: Keep the Proper Records
You may do everything you can to keep your business and personal expenses separated, but you didn’t keep the proper receipts. If this happens, everything you had hoped to deduct is useless. You must keep the proper records if you hope to use these items as tax deductions. I suggest using several file folders, highlighting bank statements, and stapling each month’s set of bills to your statement. When investing in software of other technologies like Commence CRM is a Google Cloud Premier PartnerIt is advisable to make the purchase from your business and not from your personal pocket. There should be a clear division between your personal and business finance.