Creating a firewall for your financial data is an essential bookkeeping best practice.

It’s unlikely that you started your business thinking “I’m really going to enjoy bookkeeping.” But it’s still a must for the protection of both your personal and business finances. And when you work with your bookkeeper and accountant to create a system that includes an organizational firewall between household and workplace, you can:

  1. Accurately monitor your business performance. Well-separated receipts and payments contribute to a sharper view of your business health, because you’re removing the guesswork in tagging income and expenses
  2. Ease some already tough jobs. Spare your bookkeeper and/or accountant the task of rifling through statement items on a screen or a box of receipts determining if items were for personal or business use. Free them up to spend more time finding tax-saving opportunities and fewer hours doing your business housekeeping
  3. Stay compliant. Businesses in certain industries, like financial services and healthcare, must adhere to stringent federal and/or state record keeping regulations. Collaborate with an accountant fluent in your industry’s compliance issues to develop appropriate management policies and procedures for your vital records

Where to Start

Meet with your financial advisers quarterly. Review with them the ways you’re tracking expenses. Do they have suggestions for improvement? Listen and revise accordingly: You’ll enhance everyone’s quality of life during tax season and free your accountant’s time to find greater tax savings.

Once you’re all on the same page, consider separation in these key areas:

  • Business banking accounts. This is a must for a limited liability company and S- or C-corporations (LLC or Inc.). Yet, many sole proprietors use one account for both personal and business banking–an inefficient and risky practice. If, for example, you deposit clients’ payments into your personal checking account, how is your bookkeeper going to know that?
  • Your existing bank may woo your firm with perks. Perks such as reduced maintenance fees, lower minimum-balance requirements and free services such as wire transfers, certified check-writing and external ATM fees
  • Digital payment systems. Zelle®, PayPal, and Venmo make sending cash a snap but are best managed with a separate ID and bank account
  • Credit cards and loans. When you charge business goods or services to your personal credit card, home-equity line or other credit account, you’re reducing your household’s borrowing power. You’ll also miss out on the interest deduction granted to business credit and loans
  • Online shopping accounts offering perks. Online companies that you use to buy supplies, technology or services–Amazon, Staples, etc.–frequently offer perks for business customers
  • Your salary. Whether your legal business structure requires it or not, drawing a regular paycheck from your business account (versus taking random draws) more easily distinguishes business earnings, overhead and net profit. Your accountant can assist you with the details
  • Gray-line expenses. The new laser printer in your office space is indisputably a business expense. But what about your high-speed Internet service, which you’ve been using pretty equally for work and personal activities? Work with your accountant to establish the business-use percentages for such expenses

When you take the time upfront to separate your personal and business bookkeeping, you’re easing your firm’s everyday accounting demands, saving money and abiding by tax laws and information-management regulations. For specific challenges, always consult your accountant or lawyer.

Need more information?

For more tips and tactics about separating your personal and business finances, visit a branch or call an M&T Business Banking relationship manager at 1-800-724-6070.

To access additional financial education resources for entrepreneurs, visit our Financial Education Center.


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This article is for informational purposes only. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.


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