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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

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/October2012/03/c3837.html

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

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

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