Accounts

[PINKNation]

As a self employed independent contractor do I need a separate bank account for payments and business related expenses? 

[BettieG]

Hi PINKNation!  Thanks for your great question!

While it's not legally required, and there are no direct tax consequences, to have a separate bank account for your business income and business expenses, separate from your personal account(s), it is highly recommended for a number of reasons:

• Easier/Clearer Bookkeeping -- Having a separate business account makes it much easier to track your business income and expenses which will, in turn, make it much easier when you will have to report your business income and expenses on your tax return.  Conversely, commingly your business income and expenses in your personal bank accounts is much more difficult to separate out for tax purposes.
• A separate account will allow you to track the health of your business and keep tabs on how well it's doing from a financial perspective.
• If your business is structured as an LLC or corporation, keeping your business and personal financial accounts separate is important for maintaining your limited legal liability.

As you can see, there are several benefits to establishing a separate bank account for your business.  Moreover, obtaining a business bank account is quite easy to do.

 I hope this helps, and best of luck to you!