Starting Out With a Small Business? Use These 4 Tips to Keep Personal and Business Finances Separate

Going into business for yourself can be exciting.  Especially for first-time entrepreneurs with small businesses.  But even though it’s easy to assume that everything’s running smoothly, there’s an innocent mistake that rookie entrepreneurs tend to make with their companies.  Mixing personal and business expenses.  When financial lines are blurred in this way for too long, it’s possible to end up with serious problems.

There is a Time and Place for Everything in Business:

Author Louise Pooley cautions that “When you own a business, it’s easy to think of the assets of the business as your assets. And while this is true to a point, it can cause a lot of conflicts if you start treating the business’ money as your own. Or using business accounts for personal purchases and vice versa. This is called commingling funds, and it can lead to existential financial risks for you and your business.” Here are a few quick tips on how to avoid negligence with business finances:

1.    Give Your Business Venture Unique Contact Information:

People are more likely to commingle finances if there’s a lack of separation between personal amenities and business-related amenities.  This is why it’s important to avoid using personal phone numbers/addresses for business.  Getting unique contact information conditions the mind to differentiate business transactions.

2.    Apply for a Business Debit/Credit Card:

Banking and financial resources should also be distinctive for business-related purposes.  Setting up accounts that are specifically designated for business eliminates the need to go back in time and manually confirm transactions.

3.    Archive Receipts in Different Filing Systems:

As long as a receipt has been provided for a purchase, it should be filed immediately and accordingly.  Receipts can begin to pile up when filing is either procrastinated or taken lightly.

4.    Encourage Colleagues and Subordinates to Be Cautious:

If an enterprise has more than one person contributing to its operations, it’s important for everyone to be on the same page about discipline.  Administrative policies should be clearly explained and mutually understood.

Conclusion:

The key to avoiding commingled finances is simple.  Be organized.  If a transaction is meant for business purposes, make sure it’s recorded as such.  And if a transaction is meant for personal reasons, distinguish it from professional resources.  Being orderly is the only way to inhibit frustrating mix-ups. If you like what you just read from our blog, you’ll love the various informative courses, workshops, and events listed on our websites and social media. Whether you’re interested in personal development, health and wellness, bettering your relationships, or the overall improvement of your business, give us a call at 1 (800) 913-0222 to find out how Richard Martinez can help you break past your daily struggles and start soaring in success.