Independent Contractors Need A Separate Business Bank Account
Are you concerned that you may be setting yourself up for a future problem when it comes to banking? It is a valid concern.
This is the second installment of
Independent Contractor Taxes…Know Your Options.
It can be downloaded from our eBook library.
Independent contractors need to set up separate bank accounts. It is a must, be aware it will help you avoid depositing income earned and paying expenses out of your personal checking account.
Two of the problems you may encounter are:
1) If you’re ever in a legal claim that bank account could be included in the case along with all those transactions that you may or may not what to be public knowledge.
2) As a tax professional, the last thing we want to see is you showing up at our office with ten out-of-the 12 months bank statements and a bag of receipts.
Setting up accounting software is pretty simple these days. Complete a monthly bank reconciliation categorizing/grouping expenses the best you can.
Again, as a tax professional, you want me to save you tax dollars not recreate your accounting records, in some cases it may have happened 15 – 18 months ago. Will you remember what happened 15 months ago? I will not have any idea.
Having organized records will not only save you tax preparation fees it will also help if you are selected for an IRS audit, tied out well-organized records go a long way with an auditor. Demonstrates that you are running a corporate like business not a hap hazard organization they need to check on for comingled personal and business transactions. I also suggest using one credit card for your business; same issues can come up as with a comingled bank account.
Interested in learning more about the potential pitfalls, and the tax strategies that are available to independent contractors. Download my FREE eBook: Independent Contractor Taxes…Know Your Options today.
Have questions? Contact me at Makara & Associates, LCC online or call my Naples office (239) 384-9688 or Fort Myers office (239) 768-5008.
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-Mark
This information is based on facts, assumptions and representations as stated and authorities that are subject to change. We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.
LEGAL NOTICE AND DISCLAIMER: The information within this blog is for informational and educational purposes only and is not tax advice and should not be used as such. The facts of each individual situation can have significantly different outcomes when applying tax law. The hiring of a CPA is an important decision not to be based solely on advertisements.
