Use a separate credit card and checking account for all business related transactions.

One of the very first things you should do after starting a business is to open a business checking account and set aside one credit card for business use only. The IRS does not look kindly on co-mingling personal and business finances.

Setting aside one credit card for business use is the easy part. Take an indelible marker and write something like "Biz" on the card. The card does not have to officially be a business credit card. It does not have to be under the business' name. The most important thing is to use it exclusively for business, and to use your your personal card(s) exclusively for personal use. In fact, the banks charge retailers more when you use a business credit card rather than a personal credit card, so the retailers you patronize will appreciate the savings.

Consider using cards that give you frequent flier miles. When your business flourishes and you're finally your own boss, you can treat yourself to a nice vacation. Better yet, plan a business trip somewhere exotic.

Opening a business checking account is as simple as walking into a bank, preferably the same one you have your personal account, and just ask to open a business checking account. You'll want to register your business with the state and with the IRS first. There are detailed instructions on how to do this at www.steps-to-starting-your-business.com. You'll need the paperwork you get from the state to open your business checking account, and it's preferable to use your EIN (Employee Identification Number) from the IRS instead of your own social security number. Now you're probably thinking that you don't need an EIN because you won't have any employees. That doesn't matter. Employees or not, register with the IRS and get your EIN so you can use your EIN instead of your own social security number. It's free, more professional, and further differentiates your business activities from your personal finances.

Keeping your business finances and personal finances separate serves two purposes. First, it makes tracking your business finances enormously much easier. Second, you don't want the IRS to see you commingling your business and personal finances. They may claim you're not really running a business and then disallow all your tax deductions. And as a business owner, you're legally entitled to legitimate business tax deductions that can save you a bundle in taxes. Not only is this perfectly legal, but the US Government and the IRS want your business to succeed. All the economic activity, direct and indirect, generates more revenue for them in the long run, so they're happy to provide tax deductions to help you grow your business.

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Steps To Starting Your Business (www.steps-to-starting-your-business.com) is an online course designed to help people start a sideline business. The course is directed by weekly email assignments and supported by an online bulletin board (forum) on which students can post questions.

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