Small business owners risk heavy penalties and professional fees by mixing personal and business records

Small business owners risk heavy penalties and professional fees by mixing 
personal and business records 
CIBC provides advice to entrepreneurs on how to manage their books when making 
the leap from employee to owner 
TORONTO, Oct. 3, 2012 /CNW/ - Combining personal and business accounts is one 
of the most costly mistakes many new business owners make - a mistake that can 
cost thousands in tax penalties and professional fees, says CIBC's Jamie 
Golombek. 
In a report focused on helping small business owners avoid key taxation 
mistakes, Mr. Golombek writes that while business owners may find it easier to 
deposit cheques to a personal bank account, or to charge business expenses to 
a personal credit card, these decisions can put them at risk. He notes that 
sorting out what is a business expense and what is a personal expense at tax 
time can be tricky and individuals can inadvertently deduct an ineligible 
expense - a mistake that can cost them thousands of dollars. 
"There is a lot to learn when starting your own business and there is plenty 
of room to make mistakes but one of the worst mistakes and simplest to avoid 
is not mixing business and personal expenses together," says Mr. Golombek. 
"Having a separate bank account and credit card for a business will make tax 
time a lot easier and can also come in handy in the case of a Canada Revenue 
Agency business expense audit down the road. 
"If you own a business you are required by law to keep adequate records," says 
Mr. Golombek. "Failing to do so can cause extra hours of paper work at tax 
time instead of focusing on your business and you could end up having to pay 
tax penalties." 
To make sure this does not happen, Mr. Golombek suggests the following tips. 
1. Keep personal and business separate. One of the easiest and best 


     ways to distinguish business from personal expenses is to have two
     separate bank accounts: a personal account and a business banking
     account.

  2. Keep good records. If your business is small and you do choose to
     manage your business finances together with your personal account,
     it is important to clearly define which charges are for business
     purposes, since these can be deducted on a tax return, and which
     charges are non-deductible personal expenses.

  3. Seek expert advice. Surround yourself with a team of advisors that
     you trust including a business banker, tax and legal
     professionals, prior to starting your small business.

"Taxation rules for businesses are quite complex and can change regularly," 
adds Mr. Golombek. "It is important to understand what the tax rules are, or 
better yet have an expert to look after your taxes for you."

CIBC is a leading Canadian-based global financial institution. Through our 
Retail and Business Banking, Wealth Management and Wholesale Banking 
businesses, CIBC provides a full range of financial products and services to 
11 million individual, small business, commercial, corporate and institutional 
clients in Canada and around the world. You can find other news releases and 
information about CIBC in our Press Centre on our corporate website at 
www.cibc.com.

Sean Hamilton, Communications and Public Affairs CIBC: (416) 304-8456 or  
sean.hamilton@cibc.com

SOURCE: CIBC

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CO: Canadian Imperial Bank of Commerce
ST: Ontario
NI: FIN 

-0- Oct/03/2012 13:40 GMT


 
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