Dave Says: Separate Accounts?
I have a full-time job, but I also have a small Etsy business on the side selling 10 products that makes about $200 a month. I don’t see the money from this part-time work getting any bigger in the future. Should I keep a separate account for this business, or just roll it into our regular checking account?
It’s very important to have a separate account, or accounts, for small businesses for two reasons. One, it’s a huge help when it comes to taxes and tax season. It will also give you a much clearer picture of how your business is actually doing. Whether you’re talking about revenue or tracking expenses, it will give you an easy-to-read report card.
Even if the business is small and is going to stay small, I would want to know – almost as an intellectual exercise – which of my products were winning in the marketplace. This would help you concentrate on the ones that are making you money, and allow you to focus less on the ones that aren’t doing so well.
So yeah, you need to keep a separate business account, and preferably a separate checking and savings account on your business. Make sure 100 percent of the income from the business goes into those accounts, and only expenses associated with the business come out of those accounts. With really small side businesses, your checkbook register can almost become a simplified profit and loss statement.