If you own a sole proprietorship or other type of business, you should have a separate bank account for your business. This will help maintain the separation of your personal and business finances and protect you in case of a lawsuit. If you decide to open a business checking account using your personal account, be sure to check with your bank’s policies before opening the account. You should also be aware of any fees associated with the business bank account.
While it’s perfectly fine to use your personal bank account for your business, it’s important to separate your personal and business finances. This will help protect your personal assets and make your bookkeeping more efficient. As a result, most banks offer free business checking accounts. Using your personal bank account for your business can make it difficult to keep track of your business finances. This can also make it difficult to file taxes during tax time, so separating them is imperative.
Although a sole trader doesn’t have to have a separate bank account, they should separate their business and personal expenses to avoid tax problems. The IRS allows businesses to deduct expenses, and personal costs can only be deducted when they’re connected to your business. Having separate accounts can save you a lot of time when doing your financial activity statements or tax returns. This is one of the most common mistakes that people make.