As an entrepreneur, you may have been bootstrapping your enterprise to get it off the ground, using your own money to foot the bills and any income goes right back into your account to keep the wheels turning.
It is a common mistake that entrepreneurs make, in co-mingling their personal and business finances. If this is the case for you, it is not too late to remedy the mistake.
Step 1: Open a separate bank account to be used for your business operations.
If you are incorporated as an entity, you will need your articles of incorporation and the entity’s EIN to open an account with your bank. If you are a sole proprietor you can open another checking account in either the entity’s name, your name or with a ‘doing business as’ designation.
Step 2: Cleaning up the books.
The next step is to review all the transactions in the co-mingled account up to at least the beginning of the current financial year. Ideally you have already kept records in an accounting system, if not, then it is a matter of reviewing every deposit and withdrawal from your previously used account and identify what is business and what is personal. Once you have done this you should be able to determine the net (revenue less expenses) amount of business funds in the account. Transfer that amount to the new bank account.
From the day you open the new account, all business related revenue and expenses should flow through this new account.
There may need to be some adjustments in your accounting. For example, if you have taken out more money from the account than you personally had in there. This would be recorded in your books as a loan from the entity to you.
The team at Handle It are experienced at dealing with this issue and can help you if you run into problems.
Contact us at firstname.lastname@example.org