As a business owner, you're responsible for keeping tabs on the financial health of your commercial enterprise. You're also responsible for tax preparation at both the personal and business level, which can become complex when your finances are intermingled. Keeping these different aspects of your finances separate will make it easier to stay organized, so here are a few essential steps you can take.  

A Guide to Separating Your Finances

1. Establish a Credit or Debit Card Just for Your Business

Paying for business expenses using a card ensures that you have a detailed statement each month to review, which can help track spending. This is also beneficial for keeping track of deductions like business lunches, which will all be there on your statement. While business lines of credit are one option, you can also open a separate checking account with a linked debit card.

2. Pay Yourself a Salary

It's a little too easy to dip into your business accounts when in need of money for personal expenses. However, you may end up losing track of purchases and being unable to differentiate between business and personal costs. By paying yourself a salary, you know exactly what money you're using for personal expenses—specifically, the money that's been deposited directly into your personal account. A salary also helps you establish a budget since you'll be restricted to the amount you choose to pay yourself. 

3. Keep Business & Personal Receipts Separate

You can write off certain business and personal expenses during tax preparation to reduce taxes owed. However, you must keep accurate records in case the IRS has any questions. When keeping all receipts in the same place, you're likely to have a challenging time trying to tell the difference between them. This can lead to a major issue if the IRS wants to see evidence backing up a deduction and you're unable to produce it. Keeping two separate records alleviates any confusion and ensures you have the documentation you need. 

If you need a knowledgeable accountant to help you sort the finances of your small business, contact JSR Tax Services and Small Business Accounting. They have a stellar reputation among clients throughout Sun Lakes and Pheonix, AZ, thanks to their attention to detail and high-level accounting skills. They can lend a hand with tax preparation as well as complex small business accounting to keep you on the right track. Call (480) 808-3838 to schedule your complimentary consultation today, or visit their website for more information about their plans.