Never mix business with pleasure
When in comes to your finances, it is important to keep your personal expenses separate from your business expenses. Doing this can help you in a number of ways:
Business wise
- Helps to build a business credit history. Tax deductions are great starting out but as your business grows it will need more capital. Legitimising your business and building its credit history will help to secure additional financing in the future.
- Provides a creditable image to investors, lenders and potential partners.
- Simplifies analysis for the overall health of your business. Mixing your personal and business finances can make this very difficult to do.
Personal perspective
- Removes any effects of business credit on your personal credit file and credit rating
- May simplify your personal taxes
- May decrease your odds for any audit on your personal tax return.
See your accountant, financial adviser or lawyer for more information.
I also think it is wise to have separate accountants for personal and business needs.
I do think that if people could figure out how to make money even while they were pursuing pleasure, it would be less of a hassle to go by that rule. Some people just want to have fun and aren’t able to keep it from compromising their business.