Do I Need a Separate Bank Account for My Business?

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The short answer is yes.

You need a way to segregate the business activity from the personal activity and the best way is to have a separate account and (if you use them) credit card.  This creates cleaner financial statements, which will help you manage your business and file your taxes.

It’s also one of those details that get ignored when first starting a business.

While you can take the personal statements and segregate the business through accounting software, it can complicate the financials and the tax return.  An additional reason to do this is the IRS.  If you do ever have to deal with an audit, the IRS will want bank statements.  If you’ve mixed the two activities, then you will have to present your personal statements.  Then you have to justify why every deposit is or isn’t income to you.

Trust me, it’s easier to open the business account.

Jo Hagan, CPA
Jo Hagan, CPA
Jo Hagan is the visionary and founder behind Barefoot Accounting, Inc. She's been in private practice helping businesses like yours grow, understand their numbers, handle tax issues, and more for over 15 years. As a mom, wife, and business owner, Jo understands the struggles business owners and entrepreneurs face, and she has a passion for helping people understand what they need to know in order to be successful in business!

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