![\"Use](\"https:\/\/i2.wp.com\/www.invoiceberry.com\/blog\/wp-content\/uploads\/2016\/07\/AdobeStock_70098927.jpeg?resize=690%2C303&ssl=1\")
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If you\u2019ve been in the freelancing or small business game for a while, you know how hectic it can be to track all your expenses and incomes when tax time rolls around.<\/p>\n
It\u2019s even worse if you use one checking account for all your expenses, including furniture for your home and office, a laptop, stationary, phone bills, and groceries.<\/p>\n
Some of these are personal expenses, some are business, and some are half-and-half.<\/p>\n
It\u2019s much easier for you to create and adhere to separate checking accounts, and there are tons of free and easy business checking accounts<\/a>. \u00a0If you\u2019re going to buy anything<\/em> related with your business, you should be using your business account.<\/p>\n If there\u2019s anything completely<\/em> related with your personal life, use your personal account.<\/p>\n This will help make your life easier not only for tax purposes but also when it comes time for financial planning and reviewing your business in general.<\/p>\n If you\u2019re going to open a separate checking account, you should just go ahead and get a separate card as well, or even a business credit card.<\/p>\n This will make it much, much easier to keep track of your expenses.<\/p>\n And it usually won\u2019t affect your personal credit score<\/a>, as business transactions won\u2019t show up on your credit report.<\/p>\n Even better, using a business credit card\u2014and paying those bills on time\u2014can help to increase your business credit score, which will help you to in the long run to boost your borrowing power and be approved for lower rates on business loans.<\/p>\n Some people still use shoeboxes to store their receipts. Hopefully you\u2019ve evolved to more advanced storage hardware, but nonetheless you should have at least two of those: one for your business and one for your personals.<\/p>\n Keeping personal receipts is of varying importance to your life, usually for bigger purchases, but keeping them for your business expenses is crucial for tax purposes.<\/p>\n If you don\u2019t keep any business receipts, you open yourself up to a whole heap of problems<\/a> if the tax authorities decide to come look in on your business to make sure everything\u2019s fine.<\/p>\n Even though I\u2019m sure you didn\u2019t do anything wrong, the whole process will go much more smoothly if you\u2019ve kept accurate receipts.<\/p>\n You should always pay yourself first, and that\u2019s something that a lot of freelancers and small business owners forget.<\/p>\n Pay yourself a salary every month\u2014the same amount\u2014and move that to your personal bank account.<\/p>\n Don\u2019t exceed that amount, and if you do, just like regular employees, you\u2019ll have to suffer and cope until the next month rolls around.<\/p>\n That way you don\u2019t have to dip into your business bank account. And if you find yourself running out of money consistently by the end of the month, check to see if you need a raise, or more realistically, if you need to cut back on your personal expenses.<\/p>\n On the other hand, you\u2019ll need to keep your business expenses in line as well.<\/p>\n Make a budget for your business<\/a>\u2014in whatever field you are working in\u2014and make sure you don\u2019t exceed it.<\/p>\n Because usually if you exceed that business budget, it means you\u2019ll be pulling money out of your personal account that you can\u2019t afford to waste.<\/p>\n It\u2019s easy to say that you need it and that you\u2019ll put it right back\u2014a nice new table from IKEA to make your office look better, or a new laptop, or anything else, but always ask yourself: do I need it now or can I buy it later? Or do I need it at all?<\/p>\n If you make a strict budget, you don\u2019t have even have to answer these questions.<\/p>\n Rent for the office is a business expense. So is a second phone line, or your website expenses.<\/p>\n But other things definitely aren\u2019t.<\/a><\/p>\n There\u2019s no way you can justify having dinners with friends and family as a business expense. And you shouldn\u2019t even try.<\/p>\n That\u2019s where you can get into some legal difficulties and it will create more problems in the long run.<\/p>\n But there are some things that you should deduct. For example, gas to go to clients\u2019 homes or businesses, or buying coffee for the office, or using your cellphone\u2014all of those could be written off, and you definitely should.<\/p>\n Just remember to use your company card rather than your personal one and keep the receipt.<\/p>\n You should definitely separate your home life from your work life if you work at home.<\/p>\n You can do this by designating an office space specifically and only for work in your home. This can then be used as a deduction, and you can even help to pay your home electric bill from your business account.<\/p>\n If you use it for business, it\u2019s deductible<\/p>\n Or if you\u2019re a freelancer, you can just go ahead and make yourself a company.<\/p>\n There are many different options depending on what country you live in, if you\u2019re American<\/a> or European<\/a> or anything else. In many cases, it takes only a few minutes to set it up.<\/p>\n But establishing your business as a separate legal entity provides you with many advantages, such as protecting your personal assets from losses, lawsuits and business-related debts.<\/p>\n It\u2019s important to keep not just yourself, but those people closest to you in check. Let your family and friends know that there are borders between your business and your personal life, with accompanying restrictions, and that those restrictions should be followed.<\/p>\n This also means that just because you have your own business, and it may be quite successful, they should understand that you can\u2019t be the only one contributing to personal finances.<\/p>\n If they\u2019re all on the same page, it will save you a lot of trouble down the road.<\/p>\nGet a business expense card or credit card<\/strong><\/h2>\n
Keep receipts separate<\/strong><\/h2>\n
![\"It's](\"https:\/\/i1.wp.com\/www.invoiceberry.com\/blog\/wp-content\/uploads\/2016\/07\/keep_invoices_separate.png?resize=690%2C290&ssl=1\")
<\/p>\nPay yourself<\/strong><\/h2>\n
![\"Remember](\"https:\/\/i0.wp.com\/www.invoiceberry.com\/blog\/wp-content\/uploads\/2016\/07\/pay_yourself_first-e1465906263385.png?resize=224%2C204&ssl=1\")
Don\u2019t forget about number one\u2014that\u2019s you.<\/p>\nSet and keep a business budget<\/strong><\/h2>\n
Learn what you can deduct\u2014and what you can\u2019t<\/strong><\/h2>\n
![\"Understand](\"https:\/\/i2.wp.com\/www.invoiceberry.com\/blog\/wp-content\/uploads\/2016\/07\/what_can_you_deduct.png?resize=224%2C224&ssl=1\")
<\/p>\nMake your home your office\u2014or make a company<\/strong><\/h2>\n
![\"Designate](\"https:\/\/i1.wp.com\/www.invoiceberry.com\/blog\/wp-content\/uploads\/2016\/07\/work_home-e1467291743429.png?resize=690%2C255&ssl=1\")
<\/p>\nGet your family and friends in the know<\/strong><\/h2>\n
Use software or bring in a financial consultant<\/strong><\/h2>\n
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