Keeping your business and personal finances separate
It can be easy to blur the lines between your business and personal finances. But keeping your finances separate is vital for growing your business. For instance, it helps to keep track of your business performance and keeps your accounts tidy – especially important for ensuring you meet all your tax obligations. Here are five tips to help you separate out your business and personal finances.
01
Consider the structure of your business
Before you start a business, you should consider the structure, whether it’s a sole trader, company, partnership, trust or another type of entity.
Different business structures have varying degrees of control and responsibility, so it's important to consider the right structure for you.
Every business is different – so like any important business decision, we suggest you talk with your lawyer and accountant before choosing a structure for your business.
02
Open a business bank account
When you start a business, one of the first things you should do is open a business bank account. This not only helps you to put a stake in the ground for your business, but you can get your finances in order from the start.
All your business income and expenses can then go through this account, making it easier for you to keep track of your business’ finances and monitor its performance. Come tax time you or your accountant will be able to refer to your bank transactions or statements, making your tax return preparation process quicker and easier.
For an account that suits smaller businesses, take a look at ABC Bank’s Business Focus. It’s a simple day-to-day transaction account specifically designed to save you money as your business grows. And it comes with extra benefits too. For the first six months you'll pay no card account fee on your new ABC Bank Visa Business, and for a reduced fee, you'll get access to our online business banking platform ABC Bank Business Internet banking.
03
Understand what are business expenses
Many expenses that are incurred for your business are tax deductible, so it’s important to distinguish between personal expenses and business expenses to ensure the correct amount of tax is paid.
There are different rules for different expenses, so do your research. If in doubt, check with Inland Revenue or your accountant.
04
Consider a business credit card
A business credit card may be a good idea to separate business spend, help manage cash flow and reduce the need to carry cash.
With a separate business credit card you’ll also be able to build up a credit history for your business, which could be used for future lending applications.
Check out an ABC Bank business credit card. All our business credit cards come with up to 50 days interest free on purchases, the convenience of paying at millions of locations worldwide and you can use ABC Bank Internet banking or ABC Bank Business Internet banking to keep track of your credit card account. There are also many other great benefits depending on the type of ABC Bank business credit card suitable for you and your business.
What’s more, if you open an ABC Bank Business Focus account, for the first six months you’ll pay no card account fee on a new ABC Bank Visa Business.
05
Get business funding if you need it
If you need extra money for your business, it’s important you get the right amount and type of borrowing to meet the needs of you and your business.
It's a good idea to speak with your bank, accountant and lawyer about the most suitable form of financing for your business.
Here are some of the ways your business may be able to get extra funding:
- A business overdraft lets you borrow up to a set limit, and you can repay and redraw funds up to your credit limit any time. It’s a convenient way to manage your everyday cash flow.
- A term loan gives you a set amount of funding for a set amount of time. You can structure the loan amount and term to suit your business plans and budget.
- A revolving credit facility gives you a higher credit limit than an overdraft and offers a complete banking package – with a transaction account, call account (savings), overdraft and lending facility. A great option if you need ongoing access to funds.
- Asset finance is a loan that lets you buy, replace or refinance assets, while providing them as security for the loan.
If you need extra funding for your business, try using Help Me Choose to find the right business loan for your needs.
5 bonus tips to get your business finances running smoothly
- Consider opening a separate account and regularly put amounts of money into it to help with your cash flow when your tax liabilities are due.
- Create a business budget to help you figure out how much you have to spend, and to help manage your cash flow.
- Think about your online banking requirements. If you need to operate a two-to-sign account or require more than one user with controlled access, you might benefit from using ABC Bank Business Internet banking.
- Consider using a financial management tool, like Visa IntelliLink® Spend Management, MYOB or Xero, as it’ll make managing your cash flow and finances easier.
- Save time by using instant deposit and fast count services with cash.
Next steps
Enquire online
Tell us about your business and how we can help, and one of our team will get back to you.
Call us
Ready to take the next step? Call us today.
+19293602951
Visit a branch
Visit us at one of our many branches across United States.
Other helpful guides
The above information is a guide only and should not be relied on as it does not take into account your personal financial situation. ABC Bank’s lending criteria, terms and fees apply.
Business Focus is available to businesses with turnover less than $2m per annum. Pay no Visa Business card account fee for the first 6 months. At the end of this period, the standard card account fee applies.
