If you own a small business, you are faced with countless decisions every day. One that comes up regularly is
. When it comes to buying items for yourself, putting the purchase on a business credit card is a big no.When tax season rolls around every year, it is important to have updated financial records from your business. This helps you complete the legally required tax return for your business, whether it is a Schedule C on your personal tax return or gets a business tax return of its own.
While you have to report every dollar your business brings in, you can also deduct nearly every dollar you spend on your business. Putting business purchases on a business credit card makes tracking these expenses much easier. But if you clutter up your account statement with personal purchases, tallying up deductions is a lot more work.
If an occasional purchase is made between the two, it isn't a huge deal as long as you track it, keep your receipts, and make the correct reimbursements as necessary. When those lines get blurred, you may lose your corporate legal protection.While the two reasons above are each enough of a reason to keep your finances separate, this final reason may be the most important of all: As a business owner, you need good information on your business finances to make good business decisions.
Small business owners don't have FP&A teams, however. You have to do all of that yourself. Thankfully, accounting apps like
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Source: Forbes - 🏆 394. / 53 Read more »