Separating Your Finances and Maximizing LLC Liability Protection

Separating Your Finances and Maximizing LLC Liability Protection

If you’re the owner of an LLC in Florida, then chances are that you already know how critical it is to keep your personal and business finances strictly separated from one another. Doing so is a requisite for enjoying LLC liability protections, and it makes handling tax season way easier, too. Even if you don’t own an LLC, this practice is a good way to reduce stress in your life and to survive those dreaded IRS audits.

More information on LLC liability coverage can be found here.

Keep Separate Bank Accounts and Credit Cards

If you haven’t already, the first step in separating your finances is to keep separate bank accounts and credit cards for your business and for your personal life. Don’t let these two accounts and cards cross-pollinate. Under no circumstances should you use your business card for personal purchases, nor should you do things the other way around. Keeping separate cards isn’t just about securing your LLC liability protections. It will also make life much easier for you when it comes time to tabulate all of your business expenses.

Save Your Airline Miles for Something Special

The temptation to use your personal airline miles to mitigate the cost of business travel is something that just about every business owner has felt at one point in their careers. This is especially true during peak travel times like Thanksgiving and the Holidays. But don’t give in! Travel is deductible as a business expense. Take the tax deduction and save your personal miles for your dream vacation.

Don’t Get Crazy With Your Write-Offs

Just because something is enjoyable doesn’t mean that it can’t be written off as a business expense. This includes things like wining and dining your clients as well as when you reward your hard-working employees with a little entertainment. Just be sure that you don’t get too crazy with your write offs – the IRS doesn’t have much sympathy for people who write off frivolous personal expenses in the hopes of saving an extra buck, and your LLC liability protections could suffer as a result.

With that in mind, this can’t be stressed enough: if you plan on writing something off as a business expense, you absolutely must keep your receipts. This is a significant part of proving the legitimacy of your write-offs to the IRS. Keeping up with your work calendars and tracking work events can help in that regard, too. Otherwise you might lose your LLC liability protection.

Remember Your Personal Tax Deductions

When you’re a small business owner or entrepreneur, it can sometimes feel like your business is the only thing that you have the time to pay attention to. Tax season can crank that feeling up to eleven. Don’t lose sight of your personal life – or the personal tax deductions you might qualify for.

Students can deduct up to $2,500 for their student loan interests. If you’re going back to school to continue your education, then look into education credits, too. If you have children or care for other dependents such as disabled family members, then a percentage of those expenses are deductible from your taxes based upon your income.

Most people know that charitable giving is another tax-deductible expense. Make sure to keep those receipts, too!

Looking to start a business or grow your current business? Contact FL Patel Law today by visiting our website or calling 727-279-5037.