Keeping business and private payments separate

Many business owners still pay private bills from their business account.

This can significantly add to the workload in preparing business accounts in having to identify which is business and which is private and means many more transactions need to be processed than necessary.

Yes, funds will be needed to be taken to meet personal expenditure from the business – and the best way is to transfer a lump sum from the business account to the private account and spend money from the private account. Depending on the business setup, this will be either “drawings” or a “directors loan account repayment”.

What really takes inordinate amounts of time to sort are items such as garage bills -  pay for petrol, and perhaps a newspaper, sweets or even cigarettes on the same transaction – and worse still claim VAT back on the whole of the spend! Whilst it may appear to be a “hassle” at the time, please try to pay for business and private items as two separate transactions and on separate cards! This will help keep your costs down in the long term!