Benefits of separating personal and business finance

Key points

• Separating your personal and business finances can save you time and help you feel in control.
• Accessing lending for your business can be more straightforward if your finances are separate.
• Protect your personal savings from business ups and downs.

Keeping your personal and business finances separate is an important step toward having a clear view of your business’ financial position. From making it easier to apply for business loans to protecting your personal savings, there are many benefits to separating your personal and business finances.

Why separate your personal and business finances?

Paul Presland, General Manager ANZ Small Business, outlines how a business account can simplify your taxes, protect your personal finances and make reporting easier.

{video}

What are the benefits of a business account?

Business accounts are separate bank accounts that are only used for work-related transactions. If you’ve established your business as a partnership, company, or trust, you’ll need to have a dedicated bank account for your business operations.^{Superscript: 1}

Even if you’re not required to have one, using a business account will make it much simpler to track your business expenses and tax obligations – making it much easier to accurately plan for your future.

Clear snapshot of your finances

Having a separate business account gives you a clear overview of your financial position. This will save you time ,particularly when lodging tax returns and generating business activity statements (BAS) ensuring that you are best placed to easily claim any potential tax deductions.

Access lending

Having a business account can make it easier to apply for loans and make you eligible for other types of financing.

For example, to apply for a loan via ANZ GoBiz, your business will need to have at least six months of accounting data available, including:

• loss
• balance sheet
• historical transactions
• other supporting information.

A business account can be linked to your accounting software (for example, MYOB and Xero) to track and collate this data so you can access finance faster.

Other forms of funding will also be easier to access because you can more clearly lay out your financial records.

Protect your personal financial position

Linking your personal account to your business can put your household finances at risk.

Businesses have ups and downs, but exposing your personal finances to these fluctuations could impact your ability to save, invest or pay for life’s necessities by hurting your credit score or accidentally using up personal funds.

Simplify your exit strategy

If you intend to sell your business, you’ll want to put your best foot forward. The financial position of your business will need to be crystal clear to attract buyers.

Having years of accurate financial data should not only make the sales process quicker and easier, but it might also boost the sale price of the business.

It can be problematic if you get in the habit of dipping into your personal savings to fund your business or run business expenses through your personal accounts – potential buyers might not understand the true financial position of your business.

Next steps

Spend less time untangling your finances with a dedicated business transaction account.

Learn more about ANZ Business Essentials or chat with one of our local business bankers