A separate business bank account is the first step towards a healthy cash flow
Over 70% of businesses fail within their first year due to cash flow problems
How can you ensure that your business develops and maintains a healthy cash flow? There is a need to be aware of the dangers that can pose a serious threat of causing such problems.
One risk of cash-crunch is due to mix-ups between business and personal bank accounts and credit cards. Undetected cash flow problems are generally not found until it is too late because of bank account confusion. This situation is very common among start-ups since initial financing often comes from the owner’s personal savings.
One simple solution is to open a separate bank account and have a separate credit card for business. Often times for a small business, getting a business credit card is difficult so I suggest you just get a second credit card, in your name, but designate it for business use only.
Opening separate accounts is not good enough. The most important thing is that you develop the habit of using the separate bank account and credit card exclusively for business.
The business bank account should be where you deposit customer payments, draw your salary, pay supplier, employee, and taxes. Use a separate credit card exclusively for business-related purchases. Pay that credit card from the business bank account.
At TAP bookkeeping, we provide quality bookkeeping services to help business owners make better financial decisions. Contact us for a free consultation to learn how we can help you.