Most new business owners start earning self-employment income, they may or may not register a LLC online and grab an EIN, but most are just "winging-it". Six months later they're running everything through a personal bank account, mixing personal and business expenses, and paying for the business on personal credit cards.
That mess costs you four ways.
- It costs you at tax time. Every dollar you can't prove is a business expense is a dollar you pay taxes on.
- It costs you in liability. If you mix the money, a court can pierce your LLC protection and come after your personal assets.
- It costs you in funding. Banks won't approve a business that has no separate financial identity.
- It costs you in time. Cleaning up mixed finances later takes 10 times longer than setting it up right from the start.