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Etsy Success: Separate Personal and Business Finances

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AmandaDailyWorth

This month, we’re focusing on taxes and finances and we’ve updated this post as part of February’s Getting Down to Business series. For a full schedule of events and blog posts, go here.

This guest post is by Amanda Steinberg, founder of DailyWorth.com. DailyWorth is a daily email about money for women — delivering practical tips, empowering ideas and the occasional kick in the pants.

How can you improve your business operations? One simple yet incredibly important financial step you can take is to separate your personal and business bank accounts. No more comingling of accounts, no more gray area, no more personal checks for business expenses.

A few years back, around tax time, I remember it taking me three days’ worth of effort to separate my Quicken report into personal and business expenses. Opening a second bank account is pretty easy and, even better, free. Okay, so you have to buy checks. But the time it will take you to separate data “after the fact” is ugly. Think of it as time that you could be using to sell or make your services or products.

When Your Business is More than Just a Hobby 

When you’re first starting out, it makes no sense to go overboard with new accounts or a dedicated credit card. It’s just a hobby, right? Wrong! Sales will start rolling in, and before you know it you’ll have orders to fill and more raw materials to purchase. Suddenly, you need a website, an accountant, business cards and more supplies –- you even buy ad space on a few key websites. Do yourself a favor and open a bank account specifically for your business expenses.

Yelena McManaman, social media marketing specialist and founder of 1Click VA, knew it was time to make her move when she and her husband were buying an apartment. Her business was already generating steady income, but she hadn’t yet set up a separate business account – all her earnings went into the family account and expenses were charged to her personal credit card. So when the agent asked McManaman to verify her income, she couldn’t. There was no proof of cash flow. Whoops. “That’s when I realized that having a separate business account was not only good for my business, but essential for getting any type of financing deals in the future,” she says.

Clearly, at some point it pays to separate your personal finances from your business finances. But how do you know what to do and when to do it?

You know it’s time when

You’re not sure how much money is going in or out. Budgeting is overwhelming. Costs are rising, and you’re losing track of receivables (cash that’s owed to you that you haven’t collected). You know you “should” be earning more based on sales volume. In practice, you still can’t make ends meet and you never seem to have enough cash in the bank. You wish you could run reports (expenses, income), but you can’t access the data (because it’s all mixed together).

A few ideas on what to do

Set up a second checking account. Use your business name and Employer Identification Number (EIN) on the account — do NOT make it a second personal account. If you don’t have an EIN, you can apply for one online on the IRS website. Make it your business bank account. Get a separate credit card. Concerned about running up debt? Please, be concerned. If you’re sweating a second credit card, get a debit or prepaid card instead. But get a card to manage all expenses like website hosting and PayPal transactions. Remember: A credit card is free as long as you pay off the balance every month, and there are plenty of cards out there with no annual membership fees. Deposit all of your sales income into your business account. Technically, all profits are your earnings and you have to pay taxes on the profits. But that doesn’t mean you should always take all of the profits from your business account. Put yourself on a fixed “draw” to make sure there’s operating money in the account and budget accordingly.

Set a goal to hire a bookkeeper, a bookkeeping service (cheaper than an employee in the beginning), or use a free online bookkeeping tool. Request monthly profit-and-loss statements. You need real data to understand which areas of your business are performing well – and which aren’t.

For Kate Lister, founder of Undress4Success.com and author of Undress For Success: The Naked Truth About Making Money at Home, the defining moment came when she was line-item audited by the IRS. Among the issues were credit card membership fees, if the card was used for both business and personal expenses. “In the end, they owed me money,” Lister says. “But it wasn’t enough to pay the $2,500 it cost me to defend my innocence.” Since then, she has started three successful businesses — and become religious about keeping separate accounts.

By separating your accounts, your personal financial choices (good or bad) can’t affect your business — and vice versa. You’ll also find you have better control and far more sanity when it comes to your finances.

Get more financial tips like this by signing up for DailyWorth.com, a free daily email about personal finance for women.

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  • SewnNatural

    SewnNatural says:

    fantastic ideas and advice. thank you!

    4 years ago

  • LeilanniLand

    LeilanniLand says:

    Separate accounts is a great idea. Especially early on in your business before it gets too crazy. Thanks for the advice!

    4 years ago

  • paramountvintage

    paramountvintage says:

    this helps tremendously! i did this two years ago and it really made a difference!

    4 years ago

  • sharonclancydesigns

    sharonclancydesigns says:

    Great advise, thanks so much!

    4 years ago

  • Waterrose

    Waterrose says:

    What a wonderful article and important information for all of us. No matter how small you think your business is, look to the future as you grow. Starting to put these practices into your routine now...will make doing all of this second nature. It is also exciting to see how much you do grow when you have all of the facts to compare years!

    4 years ago

  • shopgoodgrace

    shopgoodgrace says:

    Superb article ... really great, practical advice. Thank you for sharing. :)

    4 years ago

  • AlphabetLove

    AlphabetLove says:

    It is so great to see women giving other women financial advise! Thanks so much!

    4 years ago

  • AnniesWearableArt

    AnniesWearableArt says:

    this is such a treasure of information for shop owners. I hope everyone here takes the time to go through it. i consider it my Christmas gift from etsy for the next few decades!! Thank you thank you thank you!!

    4 years ago

  • SeaFindDesigns

    SeaFindDesigns says:

    Best thing I ever did.... Got my biz account and card.... Taxes are so easy now!!!

    4 years ago

  • NottyPooch

    NottyPooch says:

    This is so true. We've tried separating many things and it's really making things so much easy to track now.

    4 years ago

  • VintiqueLa

    VintiqueLa says:

    I am the worst at keeping track of everything, but I do have separate accounts! Thanks for the advice.

    4 years ago

  • urbanknitfits

    urbanknitfits says:

    FANTASTIC! thanks so much for posting this! Great resources!

    4 years ago

  • CleanRinse

    CleanRinse says:

    Fantastic. Thanks so much for the advice! I've kept separate accounts since Day 1, and thank god - it's so much easier to keep track of everything.

    4 years ago

  • lalucita

    lalucita says:

    Thanks for the great advice!! time to get serious!

    4 years ago

  • babinka1981

    babinka1981 says:

    Awesome! lovely!

    4 years ago

  • BrightWallVintage

    BrightWallVintage says:

    It's true that no matter how small you start, orders start pouring in before you can blink. Setting up a business account before you even start is super smart! I didn't do it from the beginning, but I'm glad I separated my finances when I did or I'd be totally overwhelmed. Thanks for sharing this great advice!

    4 years ago

  • oldworldprimitives

    oldworldprimitives says:

    Great advice! I think that my separate business account is essential. I am going to learn Quickbooks next year too.

    4 years ago

  • Ryanplz

    Ryanplz says:

    great! thanks for sharing!

    4 years ago

  • latelierdesbijoux

    latelierdesbijoux says:

    Very useful. On my list of things to do next year...

    4 years ago

  • bronzedstar

    bronzedstar says:

    This advice is great to keep in mind. I'll be sure to follow it when my store picks up.

    4 years ago

  • SimpleJoysPaperie

    SimpleJoysPaperie says:

    Thanks for the great business advice! I have a separate account and it does help immensely!

    4 years ago

  • redyellowandblueink

    redyellowandblueink says:

    good article. I didn't know about a bookkeeping service, sounds great. I have been put off by the expense of hiring a bookkeeper, even to just get me started. But in the long run I would imagine would pay off anyway. Thanks for the tips.

    4 years ago

  • TwistedCrystals

    TwistedCrystals says:

    This was great, thank you Amanda. I set up my business accounts years ago, it was all very easy-and helpful. :)

    4 years ago

  • RomanceCatsAndWhimsy

    RomanceCatsAndWhimsy says:

    Excellent article and solid advice. Thank you.

    4 years ago

  • simplyworn

    simplyworn says:

    great info... advice worth listening to.

    4 years ago

  • worksofwhimsy

    worksofwhimsy says:

    I recommend marrying an accountant. Works for me!

    4 years ago

  • craftscafe

    craftscafe says:

    Great advice! Thank you.

    4 years ago

  • BululuStudio

    BululuStudio says:

    Brilliant picks. Excellent info.

    4 years ago

  • yarnplusyarn

    yarnplusyarn says:

    Such great advice! Thank you so much!

    4 years ago

  • yenjewelry

    yenjewelry says:

    it is absolutely critical to have two separate accounts. it makes life much easier!

    4 years ago

  • ExQuisiteInVitation

    ExQuisiteInVitation says:

    Great article!

    4 years ago

  • baconsquarefarm

    baconsquarefarm says:

    Thank you~!

    4 years ago

  • LavenderField

    LavenderField says:

    Thanks for sharing the great advice.

    4 years ago

  • girltuesdayjewelry

    girltuesdayjewelry says:

    Thank you for this extremely important advice! I learned a lot reading this!

    4 years ago

  • BlackStar

    BlackStar says:

    Excellent post!

    4 years ago

  • MissEmmasCloset

    MissEmmasCloset says:

    awesome advice and nicely written.... i have been combining the two and not knowing the bottom line. with the new yr. i will definitely be separating business and personal.

    4 years ago

  • giraffelabel

    giraffelabel says:

    great timing for this article. this is great advice, and with the new year i know that i am ready to make a bigger place for myself and this article just gives that extra info that i need. thanks!

    4 years ago

  • Morado

    Morado says:

    so true! thanks for the advice

    4 years ago

  • BetaBoutique

    BetaBoutique says:

    This is very good and helpful, thank you very much! Also the vintage pin saver, omg, its incredible!!!

    4 years ago

  • StacyRaeT

    StacyRaeT says:

    Very resourceful. Thank you!

    4 years ago

  • ArtisticIntentions

    ArtisticIntentions says:

    Great tips! thanks!!

    4 years ago

  • BabbidgePatch

    BabbidgePatch says:

    Thank you for the article ~ I'm a subscriber to the dailyworth emails ~ great information/reminders!

    4 years ago

  • OnTheRound

    OnTheRound says:

    Exactly the information i needed - as always, Thank you!

    4 years ago

  • BlueGremlin

    BlueGremlin says:

    Thanks for the kick in the butt i need to do this!

    4 years ago

  • dykes4000

    dykes4000 says:

    Love the article. Great advice. By the way - a spammer got it - Jaoni - in at 11:47AM - advertising for a website. Hmmmm

    4 years ago

  • econica

    econica says:

    great tips! thank you so much!

    4 years ago

  • NBsBEADS

    NBsBEADS says:

    It's so wonderful that so many ETSY sellers are generous with great information and tips!!! :)

    4 years ago

  • AccountingSPOT

    AccountingSPOT says:

    Some of the best advice in getting your business accounting organized. Makes it SO much easier!

    4 years ago

  • myglamour

    myglamour says:

    I love this! Great info. Thanks

    4 years ago

  • myglamour

    myglamour says:

    I love this! Great info. Thanks a lot!

    4 years ago

  • edithandlulu

    edithandlulu says:

    You may not need checks. Don't let the bank talk you into paying for them. Also, sometimes they order the checks automatically without asking. I have a separate business bank account and I don't need to pay for checks. All of my business expenses/bills can be paid by check card or Paypal.

    4 years ago

  • lilprincessbow

    lilprincessbow says:

    Great post! Thank you.

    4 years ago

  • SICKAPPAREL

    SICKAPPAREL says:

    some great info i learned the hard way not separating things long ago and am so much more productive and efficient especially come year end , It'll save you so much time. Dream BIG and have fun!!!!

    4 years ago

  • SunnyDayVintage

    SunnyDayVintage says:

    Good stuff. Common sense.

    4 years ago

  • banyantreeclothing

    banyantreeclothing says:

    I'm afraid it has already gotten too crazy. it will be hard to combine accounts after all these years, but it is my goal for 2010. Thanks for reminding me.

    4 years ago

  • JuliesAtelier

    JuliesAtelier says:

    I just got my EIN recently! I'm an official business owner now!

    4 years ago

  • MysticalMice

    MysticalMice says:

    How funny - I posted this was great info, and thanks, and my comment was flagged as spam for review. You might want to put the captcha thing back on, as this system isn't doing too well (see real spam above from "jaoni");-)

    4 years ago

  • ThePaperTray

    ThePaperTray says:

    Great article!

    4 years ago

  • FrogPondGardens

    FrogPondGardens says:

    Thanks - I've run another business for 5 years and didn't know about the online EIN application - now I have one!

    4 years ago

  • TaraFlyPhotos

    TaraFlyPhotos says:

    Great article, although I disagree with the last statement: "By separating your accounts, your personal financial choices (good or bad) can’t affect your business"... from my own personal experience. :) I opened a business account last year, with the same bank that handles my personal account; got the business debit card, business checks, all that jazz... At one point, I accidentally overdrafted my PERSONAL account, and the bank transferred the money from my business account to cover the amount. They did not even notify me; I checked both my accounts online, and discovered my mistake (and their "fix"). If anyone else is like me, and occasionally finds themselves making errors balancing their checkbooks (be honest, lol)... I would choose two different banks, so they won't be tempted to rob Peter to pay Paul.

    4 years ago

  • starrydeborah

    starrydeborah says:

    great article, very helpful. Now I feel a little more at ease with the whole process :)

    4 years ago

  • PipocaHandmade

    PipocaHandmade says:

    Very informative...I love getting my daily dose of DailyWorth. Thanks for the advice.

    4 years ago

  • VasePlace

    VasePlace says:

    There is absolutely No reason to ignore this advice. If you are serious about being in business (and who isn't...it's alot of work!) why not simplify right from the begining, or why not start right now!! I have kept separate accounts from the get-go and keeping the books does take some effort but it is worth it in the long run to know where you stand. Are you making money? If not you can easily evaluate where to make changes.

    4 years ago

  • CindyPrints

    CindyPrints says:

    Just today I questioned whether I should set up a business account and even made an appointment at the bank for next week to discuss. But now I know that I *should* open one and will use the meeting to do it right! Thank you!

    4 years ago

  • SWANclothing

    SWANclothing says:

    thanks for making me think about this!

    4 years ago

  • SaritaBaby

    SaritaBaby says:

    Great idea!!!

    4 years ago

  • taintbosh

    taintbosh says:

    I wonder what happens if I every get to this step. Thanks!

    4 years ago

  • PreciousPromisesAust

    PreciousPromisesAust says:

    I really need to get onto that. Thanks for the reminder. It is especially good coming into the new year.

    4 years ago

  • dazzlemedesign

    dazzlemedesign says:

    ..lots of great info, thanks!

    4 years ago

  • lemondropstudio

    lemondropstudio says:

    this is just what I needed to read, and the push to get me going in the right direction. After having my EIN for over a year, it's about time I separate those accounts! THANK YOU!

    4 years ago

  • lbcooper

    lbcooper says:

    Great advice, thanks! I'm on it.

    4 years ago

  • DaysLight

    DaysLight says:

    Great article -- and with a number of great links. Thanks!

    4 years ago

  • BubbleToeJewls

    BubbleToeJewls says:

    Love the Advice and its So True, so many reason to keep it seperate :)

    4 years ago

  • FiberArtsy

    FiberArtsy says:

    Thanks for this info and advice. Will have to do this in 2010. Right now its getting too complicated.

    4 years ago

  • sofisticata

    sofisticata says:

    Thank you for the advice! :) Great article!

    4 years ago

  • woolbrain

    woolbrain says:

    Worth while advice for sure...check, for the up coming year. Thank you.

    4 years ago

  • PoppyTogs

    PoppyTogs says:

    Great info!! I took notes!! ;)

    4 years ago

  • peanutmm

    peanutmm says:

    Great article! Thanks so much.

    4 years ago

  • happycakejewels

    happycakejewels says:

    Great advice! Thanks!

    4 years ago

  • pamwares

    pamwares says:

    great article...i will say 6 mths into being a seller on etsy I separated my accounts and it was the best step in my business. just keeps my mind more focused on crafting now!

    4 years ago

  • SimpleTraditions

    SimpleTraditions says:

    Thank you so much! This article was exactly what I needed!

    4 years ago

  • MalloryMaeDesigns

    MalloryMaeDesigns says:

    Good advice. I'm glad I set up a separate account recently but wish I would have from the get-go. Just hard to know when that hobby becomes a business.

    4 years ago

  • happygolicky

    happygolicky says:

    On my way to the bank before the New Year! Thanks for the advice ;)

    4 years ago

  • designlab443

    designlab443 says:

    Great info... thank you!

    4 years ago

  • sistersilver

    sistersilver says:

    In 40+ years of business, I have only done as you say about 1 yer. I do, however, keep immaculate business accounts and find it is absolutely necessary because of all the reasons you stated above (taxes, proof of income,a record of where it all goes, etc). I do, however, never never never allow my mate to touch my accounts! It is also very helpful to do oneself a favor and put a set percentage of your income right back into the business so you can have what you need to grow!

    4 years ago

  • mysillybluehippo

    mysillybluehippo says:

    I really hope that Etsy starts to monitor the comments made by others trying to get Etsy artists to hire cheap labor overseas. This is why I love Etsy because we are a community of true handmade small producers. I moved my items here because I was tired of trying to compete with cheap labor on EBay. And for heavens sake, wouldn't you want your employees to have decent wages, insurance, and the like? I know I would.

    4 years ago

  • SandyDayArts

    SandyDayArts says:

    I'm new at this - so thank's for the advice!!

    4 years ago

  • SandyDayArts

    SandyDayArts says:

    I'm new at this - so thank's for the advice!!

    4 years ago

  • earlybirdcreations

    earlybirdcreations says:

    Some very sound advice here.

    4 years ago

  • lynndavid

    lynndavid says:

    Thanks for the great advice...I'm just starting to get overwhelmed on the financial end and this was just what I needed!

    4 years ago

  • AmericanHandmade

    AmericanHandmade says:

    Great Information, I just started, so better to start right than have to play catch up later. Thanks.

    4 years ago

  • Yayahandicraft

    Yayahandicraft says:

    Really good this advice, we always need be organize in our business and about money more. To be separate bank accounts, we now exactly our investment.

    4 years ago

  • etincellestudio

    etincellestudio says:

    Much needed! I decided to shut down my business 2 months ago as I did not take the necessary steps to separate personal and business accounts and it became a mess. Starting from scratch again now... Thanks for stressing things out!

    4 years ago

  • TEAandLACE

    TEAandLACE says:

    Thank you for the wonderful advice!

    4 years ago

  • rebeccaplotnick

    rebeccaplotnick says:

    Great information! This was perfect timing as this was on my to do list to look into for 2010. I hope my business continues to grow so i can put this information to use.

    4 years ago

  • CoolKidsBoutique

    CoolKidsBoutique says:

    Thanks for the great ideas!

    4 years ago

  • smilingbluedog

    smilingbluedog says:

    Thankyou for the reality check. Sooner is better than later for getting things organized, especially financially. I know better,but guess I need a little "kick in the pants".

    4 years ago

  • dezignsbygigi

    dezignsbygigi says:

    Great advice..and I'm going to sign up for the daily email. thanks

    4 years ago

  • Iammie

    Iammie says:

    Nice article!

    4 years ago

  • AurelieLeChat

    AurelieLeChat says:

    Very usefull comments. Clearly a lot to do for me still...

    4 years ago

  • LazyNathalie

    LazyNathalie says:

    Very helpful tip as I intend to get a Siret/Siren (France) number in the new year! Keep the useful articles coming!

    4 years ago

  • anemonecomms

    anemonecomms says:

    i used to run a graphic design firm so have set up another business entity in MYOB for my etsy transactions. i've still go the same business bank account but there's rarely any graphics transactions going on so it's easy to separate the two businesses when i go to reconcile my accounts.

    4 years ago

  • Bluebrooch

    Bluebrooch says:

    Thanks for the advise-even got some tips from everyones comments

    4 years ago

  • KIMONOS

    KIMONOS says:

    This article is what I needed to support my New Years Resolution... Thanks a lot, My to do list is getting longer and longer.. and I like it...

    4 years ago

  • trenault

    trenault says:

    I applied for my EIN before I went to bed last night, it took about 5 minutes! Thanks so much for this great advice.

    4 years ago

  • rakshniyavintage

    rakshniyavintage says:

    very useful article. I hope I will be able to do all of this soon enough when my sales increases slightly

    4 years ago

  • dbdesigned

    dbdesigned says:

    Great advice... Anyone know about our obligation to contribute to social security?

    4 years ago

  • VelveteenHabbit

    VelveteenHabbit says:

    PayPal acct works because I only use it if there is $$$ in it from profits. If no $$$ in, then NO $$$ goes out!!

    4 years ago

  • MysticalMice

    MysticalMice says:

    Great info, thanks!

    4 years ago

  • sweethead

    sweethead says:

    So glad that I have been getting Daily Worth emails. They have really brought some sanity into all of this. Now, my business is actually fun, and I can concentrate on developing my products instead of stressing about profits and expenses. Thank you!

    4 years ago

  • qluvitdesigns

    qluvitdesigns says:

    this is great information, I have been trying to keep my expenses seperate by using a dedicated paypal account for starters but with the new year comes new goals and I look forward to more success starting by making my hobby an official business.

    4 years ago

  • BlueTerracotta

    BlueTerracotta says:

    Very helpful. This is definitely on my "to do" list for the new year. I subscribe to Daily Worth, and reading it has changed the way I look at and handle my finances, however small for the moment. Thank you!

    4 years ago

  • MeadowbelleMarket

    MeadowbelleMarket says:

    Excellent article--THANK YOU! Now I know we're on the right track, and what steps to take from here (we have a "business only" account AND pay pal that transitions payments to our bank account so we can purchase supplies, ship, etc). Our bank even lets you log in online and tag/label each purchase, then download the data to quiken or another program...Now we just have to do the downloading part!

    4 years ago

  • SoniaHung

    SoniaHung says:

    This is a great article. Thanks! I am just starting this and have a 2nd personal account instead of business account. Now I believe I should look into opening one even I have not make much sales yet. thanks!

    4 years ago

  • sage12888

    sage12888 says:

    Great!!!!!!!!!!!

    4 years ago

  • HappyDoodleLand

    HappyDoodleLand says:

    Thanks for the great article! I met with an accountant yesterday as I am planning on starting my Etsy shop. (I was confused about all the legal issues, especially about sales tax in particular.)She told me what I really need to start my shop is just to get a "sales tax number" with my State (Kansas in my case)and then file sales tax accordingly. I know I should get a separate bank account for the Etsy shop and planning to do so. My question is: do I really need a business account? Can I just get a separate personal account and keep all my shop income/expenses in that account? Do I really need to get an EIN number?

    4 years ago

  • wyllowscreations

    wyllowscreations says:

    Hi,my shop name is Wyllowscreations ans I'm Canadian. When you talk about applying for an EIN for one online on the IRS website. Does anyone know where a Canadian would go to apply for one? Is there any other Canadian's Etsy sellers that would have the answer to that? Wyllow

    4 years ago

  • ElfiePins

    ElfiePins says:

    This is wonderful! Great advice, even as a business major, it is so helpful to be reminded of a step-by-step process in how to turn a hobby into a legit business! Thanks a bunches!

    4 years ago

  • thebestvintage

    thebestvintage says:

    Important information!

    4 years ago

  • CalaverasApparel

    CalaverasApparel says:

    Rad advice. I was just keeping track of money for the business using excel. A separate bank account would make this process so much smoother.

    4 years ago

  • cozettebyclearcat

    cozettebyclearcat says:

    Thank you for great advice. It is really useful. Thanks again.

    4 years ago

  • SmallJoysStudio

    SmallJoysStudio says:

    That is the best advice. I feel I am loosing track of my hobby's finances. Thanks so much, it is time to open a separate account.

    4 years ago

  • byorderofthecrown

    byorderofthecrown says:

    Thank you so much for the great advice! I had no idea about book keeping services and will look into them right now! Message us for a free item of your choice just cause I appreciate you taking the time to give us such good advice! Keep Calm!

    4 years ago

  • HomerAndMabel

    HomerAndMabel says:

    so helpful. thanks for the info.

    4 years ago

  • limezinnias

    limezinnias says:

    Loved this article. Thank you so much for sharing your advice.

    4 years ago

  • anylouise

    anylouise says:

    Excellent advise and infos, thanks soo much

    4 years ago

  • oldfashionallies

    oldfashionallies says:

    I haven't had a overwhelming amount of sales yet, but I do think a separate account would still really help. "When you’re first starting out, it makes no sense to go overboard with new accounts or a dedicated credit card. It’s just a hobby, right?" That is exactly what I was thinking when I first started reading... Now my mind has changed. Thanks much!

    4 years ago

  • DestinysTreasures

    DestinysTreasures says:

    Thank you for the great advice.

    4 years ago

  • TDIN

    TDIN says:

    Thank you for the information...

    4 years ago

  • JeweleryNut

    JeweleryNut says:

    Great Article.

    4 years ago

  • CheriChic

    CheriChic says:

    Thanks so much for the info! I had opened up a second account the first day I made my etsy site. One dollar sat in the account for a little while and thought it would never change but now I'm very glad I did it this way! Makes it much easier. Thank you.

    4 years ago

  • SnazzySnugglies

    SnazzySnugglies says:

    Great advice! This is something I had been thinking about but was hesitant to do until business "picked up". Now it is on my top ten list to do for 2010. Thanks for the reality check.

    4 years ago

  • Simag

    Simag says:

    THANK YOU for the great article! Excellent information!

    4 years ago

  • Alchemistrie

    Alchemistrie says:

    Great advice, thanx!

    4 years ago

  • carapaudecorrida

    carapaudecorrida says:

    Very helpfull information! Thank you!

    4 years ago

  • vivikas

    vivikas says:

    Super thanks for the article!

    4 years ago

  • littleyellowyarrow

    littleyellowyarrow says:

    I love my Etsy support team! Thanks for always providing wonderful and very helpful insights and tips for making our shops and lives run with ease.

    4 years ago

  • JetWhitePonytail
  • greatgrandmaagnes

    greatgrandmaagnes says:

    a lot of great ideas and advice! thanks etsy!

    4 years ago

  • SilkMari

    SilkMari says:

    Thanks for the article...look forward to more great tips.

    4 years ago

  • ZuliDesigns

    ZuliDesigns says:

    make sure it is in fact free. my bank decided to change their terms on their business accounts & started charging me each month I didn't have activity.

    4 years ago

  • licgifts

    licgifts says:

    Great tips! I am carrying two wallets. One for business, One for myself to easy track using TESAGE CHIBI C4L Clutch

    4 years ago

  • pixestreasurechest

    pixestreasurechest says:

    This is very sound advice! Please, don't wait "until business picks up" This is an essential task when you start the business, for selling on Etsy is a business! I had a biz account before I ever started anything.

    4 years ago

  • Mamta

    Mamta says:

    Great tips! Very well defined. Thanks so much.

    4 years ago

  • HappyDoodleLand

    HappyDoodleLand says:

    I have another question... How about forming an LLC? Is that needed?

    4 years ago

  • HappyDoodleLand

    HappyDoodleLand says:

    I did end up getting an EIN from IRS and it took 5 minutes; after that I used it to open a business bank account too. It's easy! Thank you so much for the advice. I have another question though... How about forming an LLC? Is that needed?

    4 years ago

  • offthewallelegance

    offthewallelegance says:

    Wow! Great advice and much needed information for all! As for an LLC, you really only need one when you have liability for large amounts of money. If you are sued for a product you sold and it (the product) wasn't what you thought it was (an antique you may have thought was worth more and thus sold it for that when indeed it was worth less than what you sold it for), the LLC will protect you from your personal assets being subject to being attached, if in fact you are sued. I have a storefront and my business name is Off the Wall Elegance, Antiques & Uniques, LLC. This way I am protected personally (my home, etc.) if my business would ever be sued. It's all very confusing and is very helpful to contact your attorney if you have any questions or if you are doubtful about anything. Hope this helps!

    4 years ago

  • TimmerysBebeBling

    TimmerysBebeBling says:

    Thank you for the great advice!!! I'm just starting out and with a new year quickly approaching, this is great advice to get me started in the right direction. THANKS!!!!!

    4 years ago

  • HappyDoodleLand

    HappyDoodleLand says:

    Thank you, offthewallelegance!!! : )

    4 years ago

  • SoapandBodyInfusions

    SoapandBodyInfusions says:

    Wonderful advice it's all confusing to me. with the advice you are giving helps a great deal

    4 years ago

  • reinaldovalentin

    reinaldovalentin says:

    That is some Wonderful cold hard truth. Thanks

    4 years ago

  • jolinne

    jolinne says:

    Thank for the advice! I really need to be more organized in that area!

    4 years ago

  • SimplyFantabulous

    SimplyFantabulous says:

    I love your advice and I am sure it will come in handy for me and many others :)

    4 years ago

  • SleepTightGracie

    SleepTightGracie says:

    What you say makes sense. The only problem I have is that it costs money to open another account (and do many other things like set up a website, etc)and I am trying not to spend too much until i earn more. I do keep track of my expenses though-just in a book I keep.

    4 years ago

  • MamaCassCreations

    MamaCassCreations says:

    I just started on here and was going to get an account soley for business, but had no idea about the EIN and how much trouble not separating personal and business can cause. Thanks so much for the advice!

    4 years ago

  • tiffystyle

    tiffystyle says:

    This is perfect as I am just starting out. I learned a lot from my childcare business but this one thing never occurred to me. Thanks for the advice.

    4 years ago

  • ReTreadThreads

    ReTreadThreads says:

    Really great article, just starting out, but it is the lightbulb moment I needed, as I hadn't clicked how important it could be for the future. Will open a seperate account tomorrow! Thanks

    4 years ago

  • futuretribe

    futuretribe says:

    thank you - an inspiration to begin the year on the right foot!

    4 years ago

  • wickedlymodpendants

    wickedlymodpendants says:

    You have no idea how important this is. My company is incorporated. I keep everything separate. I had a friend who started a wonderful magazine and truly lost everything b/c she didn't keep personal and business separate. Please keep everything separate and protect yourself personally!

    4 years ago

  • WingBijouxDesigns

    WingBijouxDesigns says:

    Thanks for the informative advice.

    4 years ago

  • mariehelenecreations

    mariehelenecreations says:

    This is such an important thing, it cannot be emphasized enough!

    4 years ago

  • OddityAndWhimsy

    OddityAndWhimsy says:

    I am fairly new to Etsy and I do not yet have a business account - but I am now motivated to do so! I wonder, though - what do you do with things in limbo, so to speak, when you are between personal and business accounts? For instance - expenses paid with a credit card or deposits to your personal account before your business account was in place?

    4 years ago

  • Dunthor

    Dunthor says:

    Wow, great advice. I have a business account but I don't use it to keep business and personal separate. Doh!

    3 years ago

  • elisawalshdesigns

    elisawalshdesigns says:

    Great advice!

    3 years ago

  • TwinTreeCrafts

    TwinTreeCrafts says:

    This is great advice. I don't think I'm there yet, but when my sales pick up and make it worth it, I will definately look into setting up a business account. Thanks for the link about setting up an EIN.

    3 years ago

  • NewtonHairJewels

    NewtonHairJewels says:

    Great advice! Here's hoping my shop gets me to that point!

    3 years ago

  • julsandmaude

    Mary Brady from JulsandMaude says:

    Record keeping. I try to make it a game--and I like to win. Thanks for the tips.

    2 years ago

  • peshka

    Peshka from Peshka says:

    Mmm.. I'm confused..

    2 years ago

  • lifecouldbeadream

    Viktoria Kovalevskaya from lifecouldbeadream says:

    Thank you! Great advice. I would have never guessed to do it - but it all makes sense. Have a great week! Best wishes, Viktoria

    2 years ago

  • SusiesBoutiqueTLC

    SusiesBoutiqueTLC from SusiesBoutiqueTLC says:

    Great advice. Great article. Thank you.

    2 years ago

  • MerCurios

    MerCurios from MerCurios says:

    I so needed this article right now. I use my business PayPal card for everything from supplies for the shop to groceries for the house. Nothing is separate and it needs to be become so sooner rather than later. xo

    2 years ago

  • holliewilson

    Hollie Wilson from TheTuftedFrog says:

    I'm SO glad to see this advice that agrees with what I've been thinking....actually just started working on it yesterday! Great info; now I have proffessional reasons for having my own business account.

    2 years ago

  • paramountvintage

    kristin from blackmoonsky says:

    this is such a helpful article!!!

    2 years ago

  • thehappycouple

    Brianna from thehappycouple says:

    I'm in the process of becoming legit right now. All the different steps and requirements are confusing. I signed up with Outright and love their product, but I realized right away I would need a seperate credit card. I'm excited about how easy it will be to keep all my finances straight.

    2 years ago

  • ikabags

    IKA PARIS from ikabags says:

    Great advise, thanks so much!

    2 years ago

  • ChalkAllAboutIt

    Heather M from ChalkAllAboutIt says:

    So true!!! Opening a business account was on the to do list all year. When I sat down to determine my 2011 income I remembered WHY it was on the to do list and opened it up right away. It was so easy, because I already had an account at the bank, everything was free! I only had to pay for checks. Plus they gave me $150 for opening the checking acoount and another $100 for opening and using a business credit card! Go for it!!

    2 years ago

  • GildedDays

    Tess from GildedDays says:

    This is something I have been contemplating for a while, but this is the push that I needed. Thank you!

    2 years ago

  • InspiredDesigns4YOU

    Vanessa Rottner from InspiredDesigns4YOU says:

    Thank you so much for this sage advise! There is often a fine line between the 'hobby status' to 'small business' and the lines are often obscured. Coming up with the necessary cash flow can be a challenge. I agree with Heather M. Thank you Heather for a great blog. All the best to everyone, keep the momentum going!

    2 years ago

  • Desireesbeadboutique

    Desiree from Desireesbeadboutique says:

    I just opened a business checking and I am amazed about how much money started adding up. I think it's a good idea also for when you go shopping so you don't over spend... never :) Thanks!

    2 years ago

  • petaljewellery

    Petal Gifts from petalgifts says:

    Interesting article - thanks for the advice!

    2 years ago

  • SilverandEarth

    SilverandEarth from SilverandEarth says:

    Great advice. This has been on my "to do" list for quite some time. Thanks for the reminder!

    2 years ago

  • sewfairycute

    Charmaine Welch from sewfairycute says:

    This is the same advice my accountant just gave me yesterday!

    2 years ago

  • Smockedresses

    Smockedresses from gavella says:

    thank you for the information

    2 years ago

  • Lambsears

    Kelly from LambsEars says:

    This was the first thing I did. Not because I was business savvy, but because I wanted to make sure that my business was paying for itself. I am glad now, because I can now show my husband exactly how the business is growing. It also controls my spending. If I don't have the $ to pay my fees at the end of the month I am in trouble! No business credit card, but I do have a business debit card. Perhaps one day I will need one, but not now.

    2 years ago

  • FrogHollowGlass
  • Woolyburrofibers

    Melissa Bonham from Woolyburrofibers says:

    Great Advice for all! Business debit card when starting off small works great. Thanks again for the advise.

    2 years ago

  • FolkAnna

    Kathy Beauregard from FolkAnna says:

    Yes indeed, a kick in the pants is worth a lot.

    2 years ago

  • OldSalty

    OldSalty from WoodinVintage says:

    I am just starting out and i really appreciate all of the great advice! Thanks :)

    2 years ago

  • TheSpeckledKat

    Katrina McMinds from TheSpeckledKat says:

    Fantastic advice! I was just meddling over this idea today :To have or have not a business bank account. My business is small..I just started in December, but I want to be able to see profit and loss without my money just slipping away into our personal life. Thanks for the advice! I think I'll do it!

    2 years ago

  • kamooki

    kamooki from BabyStepsBook says:

    Funny how I was talking about this issue today right before seeing this e-mail!

    2 years ago

  • WordArtStudio

    Sarah from WordArtStudio says:

    Good points. I avoid thinking about money :( However, I do need to make a separate account, specifically for the above reasons. I'm certain it will be easier to do it sooner, rather than later.

    2 years ago

  • raniprimmer

    Rani Primmer from JaggedTouchStudio says:

    I am looking forward to orders pouring in so I can take advantage of this!!! That would be my greatest dream come true!

    2 years ago

  • TwoLittleSunflowers

    Joanne James from TwoLittleSunflowers says:

    Good article. I don't know about all banks, but the one that I do business with in Canada does not offer the second account for free. My business account charges a monthly fee and transaction fees on top of that.

    2 years ago

  • MIRAKRIS

    mira (pinki) krispil from MIRAKRIS says:

    so true great article i separate my accounts and its make things more easy :-)

    2 years ago

  • fatepatterson

    Fate from Madebyfate says:

    Thanks :

    2 years ago

  • dianeborgmann1

    Stitches by Diane from SewingbyDiane says:

    Lots of ides to think about. Thanks

    2 years ago

  • weHANDmadethis

    weHANDmadethis from weHANDmadethis says:

    This is a great article, and I wish it was around last month when I was sorting out the details for my business. Dedicated business account and credit card is done, and I am already seeing the payoff of that decision.

    2 years ago

  • simplewhimsey

    simplewhimsey from simplewhimsey says:

    wonderful advice, thank you!

    2 years ago

  • herrlichkeiten

    Christina from herrlichkeiten says:

    Unfortunately bank accounts usually don't come for free in Germany...

    2 years ago

  • veryveraventage

    Vera Hall from veryveraventage says:

    Christina, they don't here in America either (anymore). I'm planning on using a "Green dot" debit card account for my business. You deposit the money in it (just like a bank) and you can use it as either a debit or credit card. There is very little cost involved in this account. They even keep a record of deposits and purchases.

    2 years ago

  • raredesignshop

    Nesli Ceylan from NesliCeylan says:

    very usefull thank you!

    2 years ago

  • junkgarden

    junkgarden from junkgarden says:

    Great article! I've always kept things separate. I feel much more organized that way.

    2 years ago

  • Jinkles

    Alison Swindles from Jinkles says:

    A lot of good advice and I opened a separate business account right from the start and also attended the HMRC free workshops for self-employed people. They give great advice on what needs to be documented and the best thing is that anyone can go on them and you dont need to be registered self employed first. Obviously this is just for people in the UK but I thought I would add this as a lot of your advice is only for people in the States and we have slightly different rules and systems over here. Thank you for your helpful article :-)

    2 years ago

  • pineapplepetekids

    Alison from pineapplepetekids says:

    Thank-you! I wasn't sure if I was wasting money by having a separate business account (it costs me more for cheques and service charges). I guess now I just need to start printing off reports and seeing where I need to improve...

    2 years ago

  • SnowdropsDesigns

    SnowdropsDesigns from SnowdropsDesigns says:

    I've been procrastinating opening a second account but this article has given me the necessary "kick in the boot" to prioritize it.

    2 years ago

  • MinjiArt

    MINJI from MinjiArt says:

    What do you think about using a PayPal debit card for business purchases. I really don't like using a checking account, especially if i have a personal one, a business one and a PayPal account. I want to keep it simple. Any thoughts or advice? Thanks, Mary

    2 years ago

  • zombiedezi

    Desiree Knapp from zombiedezi says:

    good ideas

    2 years ago

  • AlphabetCityStudio

    Carrie from AlphabetCityStudio says:

    Thanks! This is the next step I have to take.

    2 years ago

  • HoneyBeeHolistics

    Melissa from HoneyBeeHolistics says:

    Yes, yes, YES! This is SOOO true! Set up a separate account when I applied for my EIN & business license! Order free checks for your new account to get you started! Makes a world of difference, especially on your image as a business!

    2 years ago

  • Fevs

    Fev Masterson says:

    great advise, I've been slack up tile now, have the bank account & pay pal but there it rests. Thanks for the motivation.

    2 years ago

  • xZOUix

    Zoui from XZOUIX says:

    great one :)

    2 years ago

  • hapistitcher

    Donna Grace Hinton from HapiStitcher says:

    Thanks for the great advice. As a new shop owner, I am trying to absorb all the info I can to prevent costly errors, and attract buyers to my store.

    2 years ago

  • Divineangelshop

    Connie from DivineAngelShop says:

    Wondeful encouragement and great advice. I have a few loose ends to tie up. Thanks!!!

    2 years ago

  • toadallybowlicious

    toadallybowlicious from toadallybowlicious says:

    Great advice will look into all these points :-)

    2 years ago

  • TheLittleHappyGoose

    Britney Jette from thelittlehappygoose says:

    Thank you very much!! This is an excellent point that many new shops may no realize! :)

    2 years ago

  • rodneymcilroy

    rodney mcilroy from rodneymcilroy says:

    Building a solid online business you need to create a solid Dun & Bradstreet portfolio. It can open doors for your online company and vendors can share trade dollar amounts to open lines of credit with banks and financial institutions.

    2 years ago

  • htoepfer

    Heather from EverythingPrecious says:

    This is some great advice! How does your personal credit score affect getting a business credit card though? Thanks!

    322 days ago

  • yaojujube

    Yao Yao McGarry from yaojujube says:

    Thank you so much for you help! I am gonna start set up separate account soon.

    234 days ago

  • CARUSSDESIGNZ

    Katee from CARUSSDESIGNZ says:

    Everyone is saying thank you, and I am thankful, but if all your sales are put in your business account, what goes into your reg checking if your online sales are all you earn? IM confused how 2 break down all this wonderful advice. Katee

    6 days ago