Me after happily opening a small business bank account.
Actually..this is me after moving into my dream apartment in Chicago.. but this also accurately represents how happy I was after opening separate business and personal bank accounts and credit cards.
My advice to any business owner, no matter how small your business is:
Open a business credit card and a business checking account that are both separate from your personal credit card and checking account.
Don’t open the credit cards so you can buy things on credit, obviously. I use credit cards because they allow for maximum purchase protection and fraud and theft protection, and because they allow me to separate and keep track of expenses, and get cash back.
Open the business card and bank account just to keep finances separate for end of the year and quarterly accounting and tax purposes.
If you make over $400 profit in any year alone in the US you need to start paying the IRS taxes.
As a business owner yourself, not someone else’s employee, you’ll also need to be paying these taxes quarterly, not yearly.
The US quarterly tax dates are as follows:
One of the best things I did for my own business was to open separate business checking and credit card accounts because it lets me stay organized, primarily for record keeping and tax purposes.
Before I opened the separate accounts, I had to painstakingly comb through all my credit cards, paypal account and bank statements, combing through each one to find the business expenses and separate them from personal expenses, something I dreaded doing every few months.
Now that my finances are separate from the beginning, it makes organizing them and paying taxes much easier.
You can watch the video to hear my whole experience with separating finances here:
I use the Capital One card for my business credit card, which gives 1.5% back on all purchases, and 5% back on select office categories.
I also use the Chase Business checking account, which I like because it is free if you keep a relatively low minimum, when compared to other business checking accounts, of $1,500 in the account at all times, and it offered me a $500 bonus when I signed up.
For personal, I use my Citi Double cash credit card because I get 1% back immediately and 1% back when I pay each month, for a total of 2% back each month when I pay in full each month which is something that I do, since I don’t think it is responsible to use credit cards to incur debt due to the high interest rates.
Let me know what your favorite business checking and credit card accounts are in the comments below.