Why is it important to separate business and personal expenses?
Keeping your business and personal expenses separate—meaning, running all your business transactions through a dedicated account—is important for many reasons! Having to sort through business and personal transactions within one account complicates the bookkeeping process, increases the chances of inaccuracies in your financial statements and tax returns, and can get you into hot water if your business ever came under legal scrutiny.
To ensure your reports are timely and accurate, as well as to avoid jeopardizing your personal assets by doing what is known as 'piercing the corporate veil', it is recommended that business owners open and begin using dedicated business accounts (this includes credit cards!) as soon as possible once their business is up and running.
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Can I deduct business expenses from a personal account?
Yes! It's important to capture all business deductions, regardless of what account they came from. Qualified business expenses made out of a personal bank/credit card account can be added individually into your bookkeeping, ensuring you get the ...
How should I keep track of business expenses from my personal account?
We recommend that you keep your business and personal expenses and revenue separated whenever possible. However, we know that there may be times when you have business expenses paid from your personal account. If bookkeeping is included on your Vyde ...
Can prior year expenses by added to this years books?
Typically, only expenses incurred in the year you are bookkeeping for can be included. However, some prior-year expenses may be deducted as start-up costs. A start-up cost is recoverable if it meets both of the following requirements: It's a cost a ...
Why is bookkeeping needed for my business and taxes?
Bookkeeping is the process of tracking your business's financial transactions to create key business reports, such as your income statement (also known as profit and loss), balance sheet, and general ledger. A business's books and financial ...
How do I understand my bookkeeping reports?
Think of your bookkeeping reports like this: The income statement reports your business's revenue and expenses and gives you your "bottom line." This report helps you see if your business is making money or not and can reveal to you areas for change ...