The Benefits of Separating Your Business and Personal Transactions
2 minute read
During the early phases of launching a company, many entrepreneurs tend to blend their business and personal expenses in a single account. This can bring on an accounting nightmare when it comes time to do your financial year end.
This guide list out a 4 key benefits to keeping your business and personal expenses separate.
To qualify for tax deductions, it’s important to have all your business expenses and transaction during the financial year full captured. Having records that differentiate your personal and business expenses will help you during random audit checks performed by the government.
Beneficial loan amount and rates
Good credit ratings will qualify your for larger loan amount with better term. The best way to grow your business credit is by keep your finances separate, and register your business in different bureaus where all your expenses and debt payment will be reported.
Protect your personal assets
Differentiating your personal and business financials will be a great benefit should the company default on loan payments. As an example, if your company is registered as a Pte Ltd company, it means if your creditor pursues the payments via legal actions, your personal assets will be claimed as a part of the debt.
Save time and effort
Keeping the two accounts and expenses separately can help you save time in the long run. When you decide to hire a bookkeeper, having clear records will reduce the potential billable hours and keep them only necessary during tax periods.
If you’re looking to get help with your accounts, get in touch. We offer accounting services for companies looking to set up operations in Hong Kong.