Keep ‘Em Separated

Stop commingling! No matter how new or small your business is, you will save yourself many headaches by keeping your personal and business income and expenses separated by different checking accounts and credit cards. This is especially important if you have a day job and a business on the side. This takes the guesswork out of wondering what credit card charges are business-related. For your business checking account, you can loan funds from personal checking account to get you started and as income comes in you put all business-related sales income into that account. For business purchases (office supplies, marketing, etc) use only your designated business credit card. Then you download all your business expenses and track them by category. I just started using Wesabe and you can tag expenses similar to how you use account names in Quickbooks.

You Can Be Too Rich?!

What do you do when your business is suddenly more profitable than it has ever been??? It is good news, but the reality is that you have to determine how to allocate the extra cash flow so that it good for your business. A client of mine is doing so well this year that I have recommend to my client to work on reducing their taxable income now. The following are good ways to reduce your taxable income:

• Charitable Donations
• Pay more down on mortgage
• Investment in a IRA or a SEP-IRA
• Increase student loan payments
• Tracking all business expenses (meals, travel, delivery)

Also, use the extra cash flow to re-invest into your business. If you need new computers, software, or other supplies, now is the to time to make some smart purchases. Go on a shopping spree at Staples, but keep your receipts to give to your CPA.