If you are fixing to set up your own small business, the one thing that you will want to make sure that you do is open a separate business banking account. Do not combine your personal and business finances together. If you ever decide to incorporate your small business, it is required by the IRS to have a separate account. However, if you choose not to incorporate the small business you will want to make sure that you have a clean and accurate accounting system.
The IRS will make you establish that in the beginning that your small business is a business and not just a hobby. So by keeping a separate banking account will make it very easy to make the determination. It will also help you keep a clean case if the IRS was to ever decide to audit your business.
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