Why you need a Neat Account as a sole proprietor or small business owner
As a sole proprietor or small business owner, it might not seem necessary to open a separate account to run your business. We’ve often heard from freelancers that dealing with traditional banks is frustrating. Many decide to use personal bank accounts and credit cards to run their business.
This can all change with a Neat account.
Now that with Neat, it’s become easier than ever to open a Neat account, you may want to re-visit running your business from your personal bank account. In this article we will explain why.
To start with, we need to mention that in Hong Kong there is no law that states you need to have a corporate bank account. Legally there are no issues running your business from your personal bank account, no matter whether you are set up as a sole proprietor, partnership or limited company. However, there are several advantages of keeping your personal and business finances separate.
Save time on your bookkeeping
While having a corporate bank account is not a legal requirement, having your books in order is. If you’ve incorporated your company in Hong Kong, there is a legal requirement for an annual audit by a CPA. In order to do the audit, you need to do your accounting. It can be an arduous practice to go through your bank statement line by line to check whether something was a company expense or not. It can take you hours each week.
Raising money and keeping track of your finances
Besides bookkeeping being a legal requirement, it’s also essential to do proper accounting to know where you stand financially. Keeping track of your company spending, ideally in real-time with a platform like Neat, helps make sure you take the right financial decisions for your company. In addition, if you are trying to raise money from outside investors, they will want to see your books and perhaps your finances.
Company expenses and tax filing
Aside from the audit, it is also a legal requirement to file your taxes. Again, separating your business finances from your personal finances will increase productivity. This will make it much easier to report on your profits or losses. Keeping track of your company expenses properly may even help lower your tax bill!
Legitimise your business
Your potential customers may do some due diligence on you to check whether you are a legitimate business. This is especially true as a small or new business.