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Separating your finances after starting a business

On Behalf of | Aug 20, 2022 | Business Law

Starting a business can be a significant investment. You may have started thinking about your company and branding long before you were ready to sell your products or services.

Getting your business going may have started with a significant initial investment. Whether you needed to purchase supplies for your products or lease a retail space, the money for your business likely came from your personal funds.

Now that your business is starting to sustain itself, it is time to start looking at how you can keep the finances separate.

Why separating the money helps

When you own a business, you want to keep potential liabilities separate. If there is a legal question with your business, such as a lawsuit, you want to be able to protect your personal assets, like your house.

Keeping finances separate makes it clear that your business is separate from your personal assets and that someone’s claim against your company should stop there. To further protect your personal assets, you should be aware of what types of business structures will help you shield your personal assets from potential liabilities that come from your company.

Creating separation

One of your first steps should be establishing a separate account for your business. You will also want to create a credit history, too. These steps can confirm that your company has its own finances and that they are separate from your own.

Maintaining your books

Your financial records are essential to demonstrate that your business is separate from your personal accounts. Your books should be accurate and establish your business’s independence.

Keep in mind that maintaining financial records is not always an easy task. You may need support through accounting software or hiring a professional to support your business.