Why you should open a separate bank account if you’re self-employed
Question for my creative business newbies - Did you dive into self-employment and just start taking money and buying the things you need for your business?
Many people do. And in the beginning, the money in and out seems pretty simple, so they just use the personal bank account they already had. It seems unnecessary to have a whole separate account.
While it’s true that it’s not necessary for you to have a separate account (unless you’re incorporated), it’s a really good idea. Let me give you a few reasons why
First – It’s going to make your accounting so. much. easier.
All your transactions are in one spot. No need to pour over statements or online banking screens trying to sift out business related income and expenses. Tax time filing is going to be much simpler.
Second - With everything in one place, you’ll have a much better picture of your business finances.
When business and personal money is all lumped together it can be easy to lose sight of how much you’re making and spending. You may never really grasp how well or poorly your business is doing. With only business related transactions in your account, it will be much clearer.
Third – You’ll get better at business.
Taking the step to have a separate bank account for your self-employed dollars can help you feel more established and professional. You’re saying to yourself, “this isn’t just a hobby. I’m doing something here. And I’m going to treat it with the respect it deserves.”
So, make some time in the next week or so to head to your favorite bank and open that new account. You only need a basic account (If you’re not incorporated, it can even be a “personal” account as defined by the bank, which will help you avoid some bank fees.)
Make any changes necessary so that all the money you receive and spend related to your self-employment goes into and out of this account.
Then congratulate yourself for stepping up your financial game!
