Is COVID-19 encouraging you to open a business? Do this at the beginning!
Americans that have lost their jobs during 2020 due to the Covid-19 pandemic, may be considering starting a business.
If that is you, start by opening a business bank account - separate from your personal bank account. This account should be a checking account so you can write checks to vendors, employees or government entities.
Isolating your business money from your personal money will make it easier to manage the day-to-day finances of your business. When all of your business income and business spending are visible in the same account, it’s easier to keep track of which clients have paid you, which monthly expenses were more or less than expected and which payments have been processed.
By having a strict dividing line between your personal and business finances, you will be better protected from liabilities in the event of a lawsuit against your business.
I also recommend opening a savings account attached to the business account to put money aside for Taxes that will be owed to the IRS for the income earned (after legitimate business expenses). More about these 2 accounts and one more, in the next blog.