Tips for Keeping Wedding Business and Personal Finances Separate
As a new wedding planner, it’s an exciting time. But don’t let enthusiasm cloud your judgment and cause you to make common mistakes! Ensure success by taking the necessary steps to plan ahead; this includes understanding how you’ll manage finances associated with running such a business venture. Additionally, mixing personal money with that of the company is just one risk factor planners need be wary of when starting out. Having resources in place well before any problems arise will guarantee solvency come those inevitable bumps down the road.
If you’re like most people, you probably commingle your business and personal finances. After all, it’s easier to just have one bank account, one credit card, and one set of books to keep track of, right? WRONG. As a wedding planner, it is essential that you keep your business finances separate from your personal finances for a number of reasons. Here’s why:
When you combine business and personal funds, it becomes difficult to track expenses for tax purposes. You’ll need to be able to show the IRS exactly how much you spent on business-related expenses, and if your funds are all mixed together, that becomes nearly impossible.
Additionally, commingling can create problems if you ever decide to sell your business or bring on partners or investors. If your financial records are a mess, it will be very difficult to determine the value of your business. But if you have clear records that show exactly how much revenue your business is generating and what its expenses are, it will be much easier to get top dollar for your company.
Finally, separating your business and personal finances protects you from liability in the event that your business is sued. If your assets are commingled, a court could rule that your personal assets are fair game in a lawsuit against your company. But if your finances are separate, your personal assets will be safe.
So now that we’ve established why separating business and personal finances is so important for wedding planners, let’s talk about how to actually do it.
If you’re currently commingling funds, the first step is to open up a new bank account strictly for your business. You’ll want to get a business credit card as well—this will come in handy for things like buying supplies and paying vendors. Once you have a separate account set up for your business, start transferring money into it on a regular basis so you can begin building up a nest egg for things like marketing initiatives and unexpected expenses.
It’s also important to keep good records of all of your income and expenses. This means saving receipts for everything related to your business—from big-ticket items like office furniture to small things like postage stamps. When tax time comes around, having good records will make it much easier (and less stressful) to file your taxes accurately. And as we mentioned before, good financial records will also be helpful if you ever decide to sell or grow your business.
Wedding Business and Personal Finances Last Words
As a wedding planner, keeping your business and personal finances separate is essential—even if it takes a little bit more work upfront. By doing so, you’ll make tax time easier, protect yourself from liability in the event of a lawsuit, and lay the foundation for future growth. So what are you waiting for? Open up that new bank account today! Learn more about starting a heathy wedding planning business by enrolling in the Bride to Boss Business Suite.