A lot of small business owners get into business as they are amazing at their trade or the service they offer, but don’t really see their business as being separate to them. This can cause issues with small business finances and cash flow, and can make it very confusing and time consuming at tax time.
If your business is a Corporation, you must keep business finances separate to your own. The corporation is considered a separate legal entity and will hold it’s own tax identity as well. Business bank accounts and credit facilities should be set up in the business name, rather than the owners name.
If you are running your business as a sole trader, then making the distinction between your personal and your business finances will save you a lot of time and a few headaches in the long run. As a sole proprietor you are considered an unincorporated entity which has no legal distinction from you. All the profits, losses and liabilities are tied to you personally. However, by “Thinking” like a business it will help with running and understanding your business.