Mixing business and personal finances is never a good idea. That’s why you need to focus on how to draw the line between these two. This will help ensure the smooth running of your business and improve how the corporate world perceives it. There are many other benefits to this practice. If you are a small business owner in South Africa and you are interested in figuring out how you can separate your business and personal finances, read on to find out more. 

Separating Business and Personal Finances

As you are trying to establish your small business in South Africa, you need to understand that your business is an independent entity. Therefore, money that comes from your business must go straight into business accounts—the following breaks down a few tips to help you achieve this.

Open a Business Bank Account

The first and most important step is to open a business bank account. Many banks in South Africa offer these accounts, including FNB, CAPITEC, and Standard Bank. Your business bank account can either be a checking or savings account. However, it is advisable to start with a business checking account.

With a separate business account, you can:

  • Pay business bills
  • Deposit cash
  • Receive invoice payments,
  • Buy equipment and supplies.

Here are some fantastic options for your South African business bank account:

  1. FNB Business bank accounts – FNB offers four main types of business bank accounts, including the First Business Zero Account, Gold Business Account, Platinum Business Account, and Enterprise Business Account. These accounts have different offerings, and each of them has its own benefits. The main differentiating factor is the limit on annual turnover. 
  2. Standard Bank Business Accounts – Standard Bank also offers several business accounts, including but not limited to the MyMoBiz Business Account, Business Current Account, and Bizlaunch Account. 

Pay Yourself a Salary

Paying yourself a salary will allow you to put a formal boundary between your business money and your personal money. Simply withdrawing money from your business account and transferring it to your personal account once a month will make it seem as if you are also an employee of your business. This will help you to stop taking money randomly from your business bank account. 

Separate Receipts

You should also be more organized when it comes to how you organize and store your receipts. If there were to be an audit, SARS would want to take a look at your business receipts. And, if you mix them with personal receipts, there might be a lot of confusion there. This is another advantage of having a business bank account with separate cards. You will find it easier to separate and organize your business and personal receipts. 

Note Down When You Use Personal Items for Business Purposes

You need to take note of all the instances where you use your own personal items for business purposes. For instance, if you call customers with your personal phone or use your own car to attend meetings, you must take note. This will greatly help you during tax season if you want to write off some of those expenses.

If you want to keep on educating yourself further about business finances and personal finances, keep coming back to our blog. You are also free to share this article and others on our blog on your social media platforms. We are here for you if you need any financial advice. Please send us an email at info@thebooksconsulting.co.za or give us a call at +27 12 012 5831

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