Good to know business Tip: Personal and Business Accounts
Folks who are planning to open a small business need to know that it involves more than just making sure you market your business. It is a business first and foremost which means money is involved and is at stake. You do not want to get too caught up in the dogs and cats that you forget the business aspect of it or you could be closing the doors before you know it. When opening a small business, whether it is for pet-sitting or for any other kind of business, you will want to make sure that you keep your finances in order.
Most business owners do not have the time or the know-how to make sure their finances are in order and this is why they turn to book keepers for help. These guys know all about numbers and keeping records so the books and finances are in order. You will need to hire one if you cannot do it yourself as they are essential to good business.
But if you are just in the planning phase and you want to do things correctly, below are some important tips that will help make sure the financial aspect of your business is kept safe and secure.
Bookkeeping tips for business owners
- Never mix your personal funds with your business funds – according to book keepers, this is the most common mistake made by new business owners. They all assume it is a lot simpler to just keep all their money in one place and thus they mix their personal and business accounts but this just makes it harder for you and the book keeper to keep track of the money that is going in and the money that is going out.
- Keeping the books is not a part time job – if you want to know how much money you are making and how much money you are spending, you need to keep track of every single service or sale that happens in your pet sitting business. Mixing your personal expenses with your business expenses is likely to wreak havoc in the books and will make it that much harder to figure out if you are in the black or if you are slowly dipping into the red.
- Use bookkeeping software – if you do not yet have money to hire a book keeper to look after the books for you, the best thing you can do for your pet sitting business is to use software to help you keep track of the books. It will take some time to perfect but book keeping software is easy to use and even has tutorials.
- Keep the IRS off your case – if you do not separate your business funds from your personal funds, the IRS will tend to look at your business as more of a hobby and they are quite strict about denying deductions and losses for hobbies. If you want to make sure the IRS looks at your business as a legitimate business and not a hobby, separate your personal and business accounts. It is as simple as that.
In a nutshell
You may not be doing much business now but if your pet-sitting business is to be a success, you need to make sure you keep the books neat and clean so you can see if you are making money and if the business is feasible or not. Keep your personal funds separate if you want to have an easier time of keeping your records and want to get a clear picture of where your business is going.