Do I Need Both A Personal and A Business Bank Account?

Discussion in 'Growing and Managing a Business' started by terracottapaste, May 28, 2015.

  1. terracottapaste

    terracottapaste
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    Hi Everyone,

    Thanks, in advance, for reading and for your responses!

    I have a small business and recently transitioned from having a part time job and running the business to being completely self-employed. I recently got a business bank account and have been making an effort to keep my finances separate.

    Now that I am no longer earning personal income from my part time job all of my income is from my business. It seems to be more trouble to me to have two accounts instead of just using the business account for everything.

    I do have separate credit cards and keep track of my business income and expenses separately through a bookkeeping system and did not use my bank account statements at all when paying my taxes last year (when I only had a personal bank account).

    The trouble I am having is because all of my money comes from the same place, it doesn't seem to make sense to put half of it in one account and half of it in another especially because I don't always know exactly how much spending money I will need in either account and find myself transferring back and forth to cover that. It just seems silly. Why would I transfer money from my business account to my personal account and then spend it instead of just spending it from my business account? It seems like it would be clearer to know what money went where if it's all in the same place, instead of wondering why I transferred this much over to personal and then having to go look in my personal account to figure out what it was spent on.

    I understand the reason for having a business account and keeping finances separate, but since I keep track of everything through a different means could I get away with just using my business account for everything? I charge most everything for the business (and often personal) with my separate credit cards so it can all be looked up easily on the different cards. It's just the separate bank accounts that is screwing me up.

    Thanks!
    Leanne
     
  2. tsubibo

    tsubibo
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    I think you could just use a single bank account. As long as it is not illegal in your country to do so. I know that some countries laws need you to have a separate bank account for your business.
     
  3. david14beck

    david14beck
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    Yes, Use two bank accounts one for your personal expenses and other for business expenses.every month put some money to your personal account to pay your expenses. leave your business expenses to your business account. :D
     
  4. atlantisrocks

    atlantisrocks
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    There are a couple of issues to consider.

    First, taxes. For home business owners it is merely a convenience to have two accounts. Most people can keep track of their business income and expenses without using separate accounts. As your business grows it may become more difficult to keep track of income and expenses with only a personal account.

    Second, liability. If you incorporate and maintain your business as a separate entity you help limit your legal liability to your business. But, commingling funds could allow someone to file a claim against your business and also go after your personal funds. Keeping personal and business monies completely separate can help limit your liability.
     
  5. terracottapaste

    terracottapaste
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    Thanks, everyone! I think I have it figured out. Just trying to get used to it and determine how much I can afford to transfer to personal each week/month.
     

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