Why You Should Separate Your Personal and Business Finances

Business
Restaurant owners sitting at a table going over their finances

Many small business owners start their endeavors with their own capital investments, but it’s important to separate personal and business finances immediately — especially when it comes to banking. The U.S. Small Business Administration (SBA), recommends that you open a business banking account as soon as your business has an Employee Identification Number (EIN) from the IRS.

While you may think using one account for both personal and business expenses would be easier and less expensive, here are five important reasons to keep them separate:
  • Managing your business receivables and expenses with a personal account can make it difficult to qualify for a small business loan.
  • If you want to accept customer debit and credit card transactions or use a Point of Sale (POS) system, you will need to have an established business bank account where payments are routed.
  • At tax time, it can be time-consuming and confusing to separate personal and business expenses.
  • In the event of an IRS audit, you may have to prove why something is a business expense and not a personal one.
  • If you have incorporated your small business, the IRS will require you to keep a separate business bank account — whether you’ve set up your business as a corporation, partnership, or sole proprietorship.
Want to learn more about how HVCU can help your business? Make an appointment, visit a branch, or schedule a site visit with one of our Branch Managers today.

New businesses need support. Hudson Valley Credit Union partners with several business entities in the region to ensure your business has what it needs to be successful. You can find additional business resources on the SBA’s website, or connect with other business entities that can guide you as your business grows.

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