Tax Tip #1: Separate personal from business obligations

With only a month to go before the end of the financial year, small businesses should be making preparations to file their tax return and ensuring they don't miss out on any eligible deductions. Here is the first of D&B's Tax Tips to make the transition into FY2013 a smooth one.

No matter what kind of business you are running, the most important thing you can do is to separate your personal financial affairs from your business affairs.

Having a separate bank account and credit card for your business finances will not only help you track the cash flow and income you have earned, but also act as a proof of earnings when you are applying for a loan.

For instance, in the event that you default on your personal credit obligations, particularly if you're an unincorporated entity, separating the two will mean that your business credit history won't be impacted and hence improve your chances of obtaining a loan.

While this shouldn't be one right before tax time, many business owners get so caught up in running their business that they forget to or put off this vital task. However, if you have a steady flow of income from your business - even if it starts out as a hobby - you should ensure that all this money goes into a specific business account.

Watch this space for another tax tip tomorrow as part of D&B's daily Tax Tips series, which will run during the month of June.

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