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Stay organized! 

Keep all of your bills in one place, along with the supplies you will need to pay them.  It’s hard enough to make yourself pay your bills, you don’t want to have to run around the office looking for all of your supplies just to get the job done.  You also don’t want to lose a bill and incur a late payment fee simply due to disorganization.

Keep good records of payments you make.  In addition to making tax time easier, it will help you find any errors made by your creditors.  Although most of your creditors are probably not out to cheat you, it is not uncommon for those of us who are mere humans to make mistakes.  Even if you feel comfortable that your creditor is keeping track of your account by an “infallible” computer, keep in mind that someone has to key in the numbers and someone has to program the computer, and both of those processes can contain errors. 

If you do find a mistake in your bill, call the creditor immediately.  It’s much easier to straighten out a problem when it occurs rather than six months later, when you think you are making the final payment on a loan and the creditor thinks you still owe $10,000.  And, yes, you should report errors that are in your favor, as well as those that are in the creditor’s favor.  The mistake is bound to be discovered sooner or later when the creditor audits or balances his books, and you will definitely be held liable for the difference.  Do you really want that hanging over your head?

Separate bank accounts

Even if you run your business as a sole proprietorship, it’s often a good idea to keep a separate account for the business.  Doing so forces you to be more accountable to the business and makes you think long and hard before you withdraw money from the business for a personal purchase. 

Many businesses also keep several separate accounts within the business in order to make sure certain projects stay fully funded.  For example, if you have employees, you will have to pay employment taxes to the federal government, usually quarterly.  It is often helpful to deposit enough money to pay the taxes into a separate account every payday to pay the taxes on the total amount of checks you have issued.  Then when the end of the quarter comes along, you simply withdraw the money from the payroll tax account and you have enough on hand to pay the IRS.

Similarly, you might want to keep money in a rent and utilities account or in an account for insurance premiums.  If you have clients placing money in escrow with your firm, you definitely want to keep an escrow account so you don’t accidentally spend some of the money you are supposed to be retaining for the client’s purposes.

The more you can keep your funds from becoming co-mingled, the better it may be for you.  There will be more bookkeeping, to be sure, but you will also have greater peace of mind if you know exactly which money is earmarked for which bills.