Been running my little woodworking thing for about 18 months now and everything still goes through my personal checking account. Clients pay me, I buy supplies, it all just mixes together. Am I actually doing something wrong here or do people just say you need a business account because that's what you're 'supposed' to do? I keep thinking about it and then I look at the monthly fees and the minimum balance stuff and I close the tab. Would genuinely like to know if this is going to bite me later.
Banking
My business is small so I haven't opened a separate bank account
It'll bite you at tax time more than anything. Trying to sort business expenses out of a personal account in April is its own special kind of misery.
commingling. that's the word your accountant will use right before they sigh at you
Honestly if it's a sole prop and you're small, a lot of people do exactly what you're doing. The sky doesn't fall. But the longer you leave it the more of a pain it is to untangle later.
Also worth checking your personal bank's terms. Some of them technically don't allow business deposits in a personal account. Whether they enforce it is another question.
Ha, my old bank closed my account over this. No warning, just a letter. I was doing maybe $800/mo in deposits. So yeah, it does happen.
Everyone here is being very reasonable so I'll be the one to say it: separate accounts are not some conspiracy by Big Bank. It's like 10 minutes to open one and then you stop thinking about it. The mental overhead of mixing is the real fee ngl.
But then you have two sets of minimum balances and two sets of fees unless you find a free one. And if you're small enough that number might just be zero extra work. Depends on the numbers, which OP didn't give.
@feral_bureaucrat big bank conspiracy is a strong phrase for a Tuesday. Most credit unions will do a fre business checking with no min. That's the move if fees are the worry. OP, what's your rough monthly revenue? That changes the answer a lot.
Anywhere ffrom $400 to $2500 depending on the month. Super spiky. Which is part of why a minimum balance scares me.
Thats exactly the credit union range. Ours has a $5 share and that's it.
Unrelated but a woodworking business sounds great and I have nothing useful to add, sorry
Yeah with spiky income I'd skip anywhere with a min balance, hard stop. But I still think separate is worth it. You can literally just transfer your
The spiky income is the whole thing. If I know the deposits are already in one place and the receipts are filed it's a lot easier. But I'm not paying a monthly fee with numbers this small. Looking into the credit union thing.
There's also the school of thought that you should just use a second personal account that you never swipe. Not 'proper' but it's cheap and it works for some people.