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Do you use the same accounts for your business and your personal expenses?
Here are afew ways you could do so.
First, it can make it hard to understand how well your business is really doing.
Also, if your finances are mixed, it can cause legal problems.
Keeping your money separate can make your business look more professional tobanks and investors.
Separating your personal and business money can also help you plan better for the future.
Business owners can protect themselves from this by forming a single-member LLC.
Creating an LLC may be slightly more complicated than a sole proprietorship.
You will need to file Articles of Organization with your state and pay a filing fee.
LLCs may also haveannual reporting requirements and feesdepending on state laws.
ensure to check the requirements for an LLC in your state.
Open a Business Bank Account
Next, you better open a bank account just for your business.
Having a business bank account helps you manage your business money.
you could see what you are spending on your business and keep it separate from your personal spending.
A business credit card can help your business build its own credit history.
This can be useful for getting loans and other credit later.
It also helps keep track of expenses.
This is handy during tax time or when you better look back at your spending.
Set Up a Bookkeeping System
Bookkeeping means keeping track of all your business transactions.
If your business doesnt have a lot of transactions, it may be better to do your own bookkeeping.
you could use simple software or just spreadsheets in Excel or Google Sheets to keep track of your finances.
If your business is bigger or youre too busy, you might want to hire a bookkeeper.
This is where paying yourself a salary comes in.
This makes your income steady and predictable, just like a regular job.
Its also a good idea to back up your receipts in some way in case you lose them.
Planning Your Personal Finances
Good personal financestarts with two key practices saving and budgeting.
You should aim to save a portion of your salary each month.
Financial experts often recommend saving at least 20% of your income.
This builds a safety net foremergencies and future needs.
This lets you control your spending and ensures you could save.
Budgeting apps can help you track your spending and keep your budget on track.
This way, you’ve got the option to cover your costs without dipping into emergency funds.
attempt to account forboth future incomeand expenses so that you arent caught unawares.
Tax professionals recommend that you put aside 30%-35% of your income for taxes.
it’s possible for you to put this money in aseparate business accountso you dont spend it by accident.
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