Strictly Business

CHECK IT OUT

If you’ve depended on credit cards, cash or money orders to run your business, there are good reasons to consider using a checking account.

  • Canceled checks are great for keeping records.
  • Checks are safer than cash when it comes to loss or theft.
  • More banks belong to nationwide auto-teller networks, such as Cirrus, so you have more access to quick cash on the road than ever before.
  • A checking account, unlike a credit card, forces you to live within your means.
  • Don’t be ashamed if you have trouble balancing a checkbook every month. Someone at your bank can show you how.
  • Running an owner-operator business is hard enough. If you’re among the one in three owner-operators who don’t have a separate checking account for business, you could make life a lot smoother – and more profitable – by segregating your operation’s finances.

    Here’s why business checking and credit card accounts should be kept separate from personal accounts:

  • You can tell how well your business is doing. You might still depend on your accountant for detailed annual (or preferably quarterly) reports. But a glance at the balance of your business checkbook or credit card account gives you a snapshot of profitability from week to week.
  • You can pay yourself defined amounts on a regular basis. That helps you gauge your standard of living. It will also help you decide if you can afford discretionary personal purchases, whether it’s the new Randy Travis CD or a weekend vacation.
  • You can monitor costs. Fuel, oil, tires, food – whatever categories you choose to define can be tracked. This can help you spot costs that are getting too high and that could be trimmed to save money. An unexplained trend, such as a steady rise in tire costs per mile, might help you discover a problem that needs maintenance, and that will save money once it’s corrected. Owner-operators who keep operating budgets and analyze them to lower costs have an average income $5,600 higher than those who don’t.
  • You will have a much easier time with the Internal Revenue Service, should you ever be audited.
  • Contractors who use a business checking account average $4,200 more in annual earnings than those who don’t, according to the Overdrive Market Behavior Report. As with other business habits, such as regularly figuring cost per mile, it’s not that this procedure alone improves your bottom line by that much, but such traits are among the professional practices that the most successful owner-operators depend upon.

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