ANZ EFTPOS Terminal declined 51
Business owners should keep business and personal expenses separate.
It is common sense for all business owners to operate business-specific bank accounts, even if personal and business matters seem like one and the same.
As well as just simply having clarity in knowing what money is where, there is a lot of time, stress and costs to be saved when personal expenditure is not being mistakenly taxed and accountants aren't spending hours trying to analyse transactions.
Senior lecturer in management at AUT University George Thien says it is most important for those who are one with their businesses to be diligent about splitting those finances.
"It's very tempting when you have business money going into a personal account. You can say, 'Oh let's take $5000 here and buy a little boat'."
"If they don't separate those things, at the end of the day they may find their business is short of money."
There was nothing to stop owners from taking money out of their business accounts though but it required discipline, which is unfortunately difficult for most people, Thien said.
As a former bank manager, Thien has seen some disciplined clients but said most caved in to the irresistible pull of money.
Having a business account with a different bank might help but the internet and mobile phones have made inter-bank money transfers dangerously easy.
It therefore becomes even more important for business owners to keep a good relationship with their banks and a clean track record, ensuring they did not give them any excuse to decline applications to much-needed funds, Thien said.
Accountant and director of SME Financial, Geoff Hamilton, recommends business owners put aside money specifically for GST and income tax - usually somewhere between 28 per cent and 32 per cent of their income.
"So often clients spend that money. From the first day you start a business any profit is going to be subject to tax, " he said.
