Business Owners Avoid These Mistakes With Your Finances
The Difference Between Company vs Personal Expenses
New business owners often struggle to differentiate between true company expenses and those that are actually personal. While it’s only natural to seek out ways of cutting costs while your business is growing, owners who fail to separate their personal and business finances end up with a mess on their hands.
First, as a business owner, you need to structure your small business for your needs, it’s important to consider your long-term and short-term goals for the business and for your financial needs. Hiring an accountant from the beginning will help you in determining if you need to run your business as a sole proprietor or should your business be in a Corporation. These are things you are going to need to know not only for accounting information but for tax purposes.
Where is your financing going to come from?
After you have set up your new business you need to look at financing. Where is your financing going to come from? The American Dream is to own your own business, but many people do not stop to think where the startup money will come from and if it is from savings do they have enough to keep the business going? If you are using your savings account is that leaving you personally with no emergency saving fund? It’s not uncommon for small business owners to look for commercial financing to get their business up and running. But it is important to put it in the business name and not in your personal name. The fact is personal guarantees to secure a loan can put your personal assets at risk. You also need to take time and effort into building up your business credit.
Many times I see people who have businesses and they do not take the time to set up or think through a business plan so they start to mix their personal and business accounts together. Soon it becomes a rob Peter to pay Paul. Many business owners then start to get in over their heads in debts and they do not know where to turn.
As a small business owner, one of the best things is that you have figured out what works and what you do well. Then you throw 95% of your energy and resources in that direction. Small business owners are masters at prioritizing, assessing, and restraining. If you can learn to implement these principles in your personal finance you’ll be on your way to financial freedom.
80% of Americans are caught up in the chains of debt. It's time to break free from those chains, master your money and transform your financial future.
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