Running your driving school without a dedicated business bank account may be tempting, but…
As your business grows and expands, it’s extremely important to separate your business finances from those of your personal, day-to-day living.
We ADIs have a habit of co-mingling our money, and while it may be the easiest, most convenient and cheapest way of operating, it can have its drawbacks, some major, further down the line.
Your business is just that, a business, regardless of whether it’s a part-time venture or not. While setting up a separate account may mean additional fees and expenses, keeping your business income and spending separate to your personal account ensures better manageability.
While many of the business current accounts available charge you for their services, there are others that waiver the charge as long as you pay in more than a certain amount each month, or even offer the first year free of charges. So, make sure that you shop around for the best options and take advantage of the best deals, and certainly don’t assume that your personal banking provider will be the smartest choice for your business account.
Cheques & Checks
If you’re still convinced that incorporating your business finances with your personal money is a good idea, here are some reasons why you should think again.
A hobby – It’d be extremely difficult to prove to the government that you are trying to run a legitimate business if your finances don’t reflect this. It’s a rule that only true businesses can deduct business expenses – running your business with your personal account may seem as though it’s more of a hobby business (i.e. not-for-profit) and you may have to prove otherwise.
Tax return time – Trying to get your taxes in order can be a pain at the best of times, let alone when you’re trying to navigate your way through your personal finance statements to find your business-related expenses. Personal transactions have to remain completely separate from business ones, which is bound to be more complicated if you’ve combined them. It’s also easy to miss appropriate deductions if you’re searching through your personal current account. Whether it’s you, or an accountant, completing your tax return, tidier, well-kept records will ensure that you can claim back every penny. If you operate from a separate business bank account, you’ll be able to provide a clear audit trail too.
The professional – If your driving school operates from its own, separate business account, you will be demonstrating complete professionalism too – definitely a plus point when it comes to attracting new students. It’ll even make you feel better.
By shopping around for the best deal, you shouldn’t have to worry about spending extra each month on an account that isn’t completely suitable. It’ll make admin easier, money management less stressful, and working out your tax simple
Remember that you are running a business, whether you are part-time or full-time, no matter how big your school is, and treating it as such will give it the best chance of flourishing.