Separating Business & Personal Finances

When you decide to open a new business, you may not think it is important to create a separation between yourself and the business. Although that may seem easier to start with, longterm, it can actually hinder you, and even be damaging to your personal life. There are many reasons to separate your business and personal finances and it does not have to be difficult to do!

Why it’s Crucial to Separate Your Finances

Separating your business financials from personal has one encompassing importance: a clear understanding of your business. This clarity has many benefits. For one, bookkeeping becomes easier for everyone. The separation of accounts means you don’t have to sift through each transaction to see if it’s business related or not. Thus, saving time on monthly bookkeeping, allowing you to see deductible business expenses, and having more refined reports on your cash flow, budget, and more! Another way having different accounts is beneficial is that it protects your personal assets. If anything were to happen to the company, having intertwined accounts can mean loss of these personal assets as there was no distinction in the beginning. Next, taxes can be time-consuming, stressful, and even confusing for some. By having distinct accounts, it makes tax season a little more effortless and even reduces your risk of filing something incorrectly, or triggering an audit. Finally, having independence as a business can build credibility and show professionalism. This is because some individuals, and even financial institutions, may find business names to be more trustworthy over personal names. Also, by allowing it to run on “its own,” this can show confidence in your company, and gain further trust. 

Where Do I Begin to Do This?

Once you have decided to start the process of establishing your business as its own entity, it may be hard to know where to begin. A good place to get the ball rolling is connecting with a CPA (certified public accountant). CPAs can guide you in what the best type of business set-up (think LLC, etc.) is for your needs (and wants) and ensure your personal finances remain segregated. If a CPA is currently out of the question, as they can be quite expensive, consider speaking to other business owners and where they started as well as researching the different types of business structures. (Feel free to check out this link to decide on what business structure will work for you.) Next, it’s time to create an EIN for your business. EIN stands for “employer identification number” and works similarly to a social security number. You can do this through the IRS’s website or your CPA can do it for you. After this, you’re going to open a bank account solely for your business. Spend time researching what the best bank is for your needs and what type of account will benefit you the most. Furthermore, don’t forget to apply for any credit cards you need and make sure that anyone in the business who may need to use company money has a business card/account as well. Additionally, it may be likely that you will use personal funds to kick off this account. If you are working with a CPA, you’ll want to ensure these transfers are clear and coded correctly for your business. Finally, choose an accounting software that works for your company. There are many different types of accounting software to choose from but it is crucial to pick one to keep your business books clean. Spend time looking up what would work for you and what needs you require for your business. Alternatively, hiring a CPA, or even other accountants/bookkeeping professionals, can aid you by cleaning up your books every month and then regularly reviewing them so you have a greater understanding of where your financials stand. Moreover, keep track of your receipts! While this can be quite tedious, receipts prove that the money you spent is correctly coded, and for some expenses, guarantees the tax write-off for X category is true. Making this habit from the start can make any audit run more smoothly if that were to happen. What’s more is that some software, like QuickBooks Online, allows you to upload receipts from your mobile device. So, again, choose business software that works for you. Once all these steps are taken, you are ready to move forward to start the journey of transforming your (small?) business!

Separation is Very Beneficial!

Overall, maintaining different accounts is vital to the longevity of your business, can help your business grow, save you from difficulty in the future, and isn’t overly complicated to begin with!

The Many Benefits of Personal Cleanliness & Organization

It is, usually, expected that your workspace should be clean and organized. Though this is true, it is just as vital to keep your everyday spaces clean, like your home and/or your car. There are many positives to having your life clean and organized.

Cleanliness Benefits

Some of the biggest upsides to keeping your surroundings clean, is an increase in mood, focus, and productivity. For many, orderliness can help individuals feel they have control over their environment – allowing them to feel a bit better in stressful times. Furthermore, cleaning can cause you to concentrate on X task(s), which can help you feel more calm and less anxious about whatever you’re going through. On the contrary, disorderliness can cause someone to lose focus, feeling overwhelmed as their brain has to process many things at once. Moreover, lost focus means less productivity as you scramble around to find solutions. For some, repetitive cleaning can teach self-discipline and make you happier. When your spaces are clean, you are able to move onto other problems and find more peace. Moreover, keeping your house clean will make you more grateful and appreciative to simply be at home.

Alongside all of that, cleanliness is, obviously, important in preventing illnesses for yourself and others. According to the CDC, washing your hands reduces respiratory illnesses by 21% and diarrheal illnesses (from weak immune systems) by 58%. By keeping your spaces clean, you reduce the amount of allergens you’re surrounded by and lower your risk of breathing diseases as well.

Organization Benefits

With cleanliness, comes organization. It is essential to recognize the plus side of organization within cleanliness. For starters, organization can improve decision-making, allowing you to come to decisions quicker and boost your confidence, since you know you have all the information you need. Additionally, when there is no clutter, you have more space to surround yourself with items that inspire and motivate you – bringing more creativity into your everyday life. Another way organization can better your life is in financial management. When you’re organized, you can keep track of your documents, record your expenses easier, and create a budget properly.

Like cleanliness, organization can improve physical health in different ways. Often, when one’s life is organized, they manage time better. This time management can help you create routine and empower you to create a healthier lifestyle overall.

Tips to Help Clean-up your Spaces

Cleanliness & organization does not come natural to everyone, and may even prove difficult for others. Luckily, there are a few tips & tricks to help get your life clean and orderly! First, it’s okay to start small. Looking at everything that needs to be done can be extremely overwhelming. Pick a space, or task, to do each day. Breaking things up day by day can ensure you don’t increase stress. Also, you could opt for making a timer. Choose what you wish to clean and set a timer. Your goal here is to clean as much as you can until the timer goes off.

If there is a big task you are starting, consider breaking things down into piles. It may be less taxing if you start with the biggest things first. That may be boxes or even excess furniture. Then, you can move onto the smaller items – like books, toys, clothes, etc. Separating your items out can make it seem smaller as well as give you the opportunity to let go of items you no longer need.

With all of that said, don’t feel ashamed to ask for help! Sometimes, life can get ahead of you or it can just be a bit much. Whatever the reason is, having a friend or family member sharing the load can help you get through this. If you have the funds, it may also be worth your while to invest into a housekeeper and/or any equipment that could make cleaning easier for you (i.e. like a Roomba).

Proper Cleanliness & Organization is Important!

In summary, organization and cleanliness plays a vital role in health and life satisfaction; thus enhancing both your personal life and work life!