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 .