Regardless of the size of your business, you should separate all your business financial information and record keeping from your personal banking.
It does not look like you're very serious about your business if you continue to co-mingle your business and personal checking accounts, credit lines, credit cards, etc.
Legitimate companies keep their financial transactions totally separate from those of the owner. So should you.
Separate accounting will help you to avoid confusion, keep your information organized for tax purposes, and it will give you a "check" on the health of your business.
Financial reporting should be done regularly so you can evaluate the health and profitability of your company. Monthly financials will provide you with a snapshot in time of your cash flow, outstanding debts, and receivables, expenditures and current revenue.
You may believe as a small solo business owner that such detail is not necessary in your simple business since you don't have a need for complex accounting systems and you don't report to a higher authority.
You may need such information in the future. What if someone makes you a very enticing offer to buy your business and insists upon reviewing your monthly financial reports for the past three years? It would be nearly impossible to go back over that time and reconstruct all your transactions and records.
Detailed information will help you in other ways. You may need to apply for credit or a loan at a bank or with a vendor.
Chances are good that they will ask for your financial records to see if you are credit worthy. If you can't produce the proper information, you're not likely to be given much consideration.
You should also consider signing up for a merchant account if you sell goods and services.
You can get by for a time with a non-merchant account service like PayPal for your financial transactions; however, you will not be considered as professional as you otherwise could be if you went to the effort and expense of setting up your own merchant credit card processing at your web site.
I would recommend keeping your PayPal account and offering that service in addition to your own credit card processing simply because there are so many online consumers that prefer to use PayPal over other regular merchant accounts.
In addition, you may want to extend credit in some way to your customers. Be sure to use a regular and detailed credit application and be thorough about explaining all your terms and conditions up front.
Remember, a huge sale of $1 million is worthless and will only cause you to lose money if you can't collect on the sale. So be careful and stay on top of your customers that are extended credit. Send them regular invoices, monthly credit statements with balances, and make sure they abide by the terms of your credit policy.
It goes without saying that you should provide a full disclosure of all your financial terms and conditions on your web site in a prominent place.
You should also be very explicit about your product or service guarantee and what recourse the customer has in case of a dispute.
If you don't pay attention to these details before questions arise, you may expose yourself to unnecessary liability when the first problem situation arises.
Seek professional help from a CPA or financial adviser if you have questions related to your business policies, rights, and safeguards. Ask also about securing insurance against omissions and oversights.
