1. Using a Personal Account for Business Transactions
7 BOOKKEEPING MISTAKES THAT REAL ESTATE BUSINESS OWNERS MAKE AND HOW TO AVOID THEM LEON MCKENZIE
And while you have the option of hiring a bookkeeper to sort out your business finances, you still need to take an active role in managing them. You could start by identifying the common mistakes small businesses make and do everything you can to avoid or rectify them.
So, what are these mistakes? And how should you go about addressing them?
1. Using a Personal Account for Business Transactions
A personal bank account is for personal financial transactions. This is the account that allows you to pay your personal expenses and keep your savings. But many small business owners, which include those in the real estate, tend to use personal bank accounts for business transactions.
This is a big nono.
At no point in time should you do such a thing. How are you going to trace what is coming in from your business? And how will you be able to separate your personal and business transactions?
Mixing things up in this manner is a recipe for trouble. Sooner or later, the IRS may require you to account for all monies coming into your real estate business, and you will be unable to meet their requirements – at least not without some expensive accounting help.
If you are currently running your business and personal life from one bank account, you need to do something to change that. Opening a business account takes a short time but will save you a lot of grief in the long term.