Ways to Separate Your Personal and Business Financials

I know that this is probably a common sense thing to most people, but you would be surprised with how many people I get coming to me about a business loan and they have not done this. This seems to have been especially common when dealing with sole proprietorships. I get the question of-Do I have to separate my business and personal information? The answer is a resounding-YES!

1. Bank Account-Make sure you have a separate business bank account from your personal bank account. Not only do you want to make it easier on yourself to show your business financials, but this will also prevent you from getting into tax trouble. If the IRS starts to see you co-mingling your business and your personal monies, you could be taxed on all of it and miss out on the nice tax breaks you get while being a business. 
2. Tax ID-Try to have a separate Tax ID number instead of using your SSN. It's not really a necessity (depending on your business entity), but it helps to separate the business from personal information. You can apply for an EIN on the IRS website and get one immediately. 
3. Business Entity-How about forming a corporation or LLC? There are some costs to do this initially, but in the long run both entities have their benefits when it comes to deductions. It definitely makes the separation between business and personal a lot more clear. It can also help in case you are ever sued.
4. Credit cards-Try to make sure that you have business credit cards. You can get one from a bank, credit union, or vendor. The good thing about it is that it is in the business' name instead of yours. This will help you to build business credit on D&B, Business Experian, and Business Equifax. All of this would be separate from your personal credit. I have seen some business owners with personal credit in the 500s and get $50,000 loans because their business credit is great. 
5. Address- Nowadays, there are a tone of home-based businesses. There is nothing wrong with this. However, it may be prudent to lease office space or maybe sign up fr a virtual office. Lending institutions like to see a physical address and not P.O. Boxes. You don't really want people to come to your house for your business, unless you run that type of business. 

Check out this nice article about things you need in order to finance your business: http://bfs.ag/635237/6690.