Don’t use your personal accounts for business transactions
As a start-up we understand the need to keep expenses as low as possible while you are first starting out. Although we encourage you to run lean, it is absolutely essential to have a business bank account and credit card – don’t use your personal accounts.
All of the major Canadian banks have small business startup accounts that are very inexpensive or even free to start out with. It will provide you with the separation you need to keep your personal transactions separate from your business transactions. If you are having trouble getting approved for a business credit card for any reason and you have more then one personal credit card, simply pick one of them to use strictly for business purposes.
Most times founders believe it is very easy to keep track of their business expenses. The reality is that when you start a business you will inevitably let your record keeping go by the wayside when you are busy creating or running your business. If your records are not separated you will spend hours trying to sort through them when you are doing your books. In addition, it will increase the time and your expenses when it comes time to hire a bookkeeper or accountant to do your books.
The CRA is known for frowning against personal expenses getting mixed up with your business expenses so be sure you keep them separate. Make life easier on yourself and your accountant by ensuring that your records are kept easily in order.