Should the self-employed person have an account just for his or her business?
Posted: Mon Dec 23, 2024 8:24 am
Should a self-employed person have a separate bank account for his or her business?
When we talk about entities such as commercial companies, associations or non-profit entities, it is mandatory that they have a specific bank account to manage their treasury and accounting. This ensures that all movements reflected correspond exclusively to the activity of the entity, without including personal expenses of its partners or participants. Tax regulations, such as Corporate Tax, require clear and precise accounting , which makes it impossible to mix personal and business finances.
However, what about freelancers? Unlike legal entities, freelancers operate as individuals and are not legally required to have a phone number in us separate bank account for their business. Despite this, maintaining a single account for professional activity and personal expenses is an inadvisable practice.
Advantages of separating accounts
Financial organization and resource control
Having a dedicated account for your business allows for better cash flow planning, makes it easier to track income and expenses, and helps evaluate the real profitability of your business activity. For example, it avoids confusion between personal expenses such as mortgages or household supplies and business payments such as supplier invoices.
Ease of justifying deductible expenses
A business account simplifies the identification and justification of expenses related to professional activity. This is especially relevant when deducting bank fees or justifying payments before a tax audit.
Better banking conditions
Many banks offer specific accounts for companies or self-employed people with additional benefits, such as lower fees or associated cards. These advantages can be useful in the financial management of the business.
Financial discipline
Separating finances helps freelancers allocate themselves a fixed monthly amount as a "salary," which makes it easier to control their personal and business budget. It also helps them avoid spending funds needed for future payments, such as taxes or bills.
When we talk about entities such as commercial companies, associations or non-profit entities, it is mandatory that they have a specific bank account to manage their treasury and accounting. This ensures that all movements reflected correspond exclusively to the activity of the entity, without including personal expenses of its partners or participants. Tax regulations, such as Corporate Tax, require clear and precise accounting , which makes it impossible to mix personal and business finances.
However, what about freelancers? Unlike legal entities, freelancers operate as individuals and are not legally required to have a phone number in us separate bank account for their business. Despite this, maintaining a single account for professional activity and personal expenses is an inadvisable practice.
Advantages of separating accounts
Financial organization and resource control
Having a dedicated account for your business allows for better cash flow planning, makes it easier to track income and expenses, and helps evaluate the real profitability of your business activity. For example, it avoids confusion between personal expenses such as mortgages or household supplies and business payments such as supplier invoices.
Ease of justifying deductible expenses
A business account simplifies the identification and justification of expenses related to professional activity. This is especially relevant when deducting bank fees or justifying payments before a tax audit.
Better banking conditions
Many banks offer specific accounts for companies or self-employed people with additional benefits, such as lower fees or associated cards. These advantages can be useful in the financial management of the business.
Financial discipline
Separating finances helps freelancers allocate themselves a fixed monthly amount as a "salary," which makes it easier to control their personal and business budget. It also helps them avoid spending funds needed for future payments, such as taxes or bills.