How to Balance Personal and Business Finances

If you are running a business, it can be increasingly difficult to separate your personal finances from your business finances to ensure that you have enough money to stay afloat while you are setting up your business. Additionally, if you fail to separate your finances, this can lead to additional stress when it comes to the end of the tax year.

1.   Take Out a Small Loan

If you are struggling financially while setting up your business, or if your business is quickly draining both your business and personal assets, you should consider taking out a small, repayable loan. A loan will help you in the short-term to meet the needs of your family and let you focus your energies into your business. Small loans allow you to borrow money for up to six months which means you can meet all of your urgent expenditure problems, such as tax bills and rent, while you are struggling to make a profit from your business.


2.   Open a Business Bank Account

To separate your finances, you should open a business bank account that is different from your personal bank account. Not only will this show you instantly how much money you have to reinvest in your business, but it will spare you the temptation of investing your personal finances- and that of your family- into your business. This will also help you to organize your finances when it comes to paying tax, as you will be able to see in an instant how much money you have made in profit and the expenses which you have paid.


3.   Get a Business Credit Card

Getting yourself a business credit card will enable you to pay for expenses strictly from your business funds, rather than having to dip into your personal account. Not only will this make your bookkeeping easier when it comes to proving the expenses that you have paid, but it also means that you can keep track of what you have spent on your business- without the distraction of the latest toy for the kids.


4.   Write Yourself a Paycheck

Knowing how much of your available cash can be freely spent each month can be challenging each month, and you may struggle not to go over budget when you have access to both a business and personal account. However, writing yourself a wage each month that takes your business profits and gross revenue into account will allow you to recognize how much profit you have to spend each month, and how much needs to be saved towards the expenses of your business.


5.   Track Expenses

However, all these tips would be useless if you did not track the expenses that you have paid out on for your business. To do this, you should keep all the receipts from expenses and store them in a safe place until it comes to writing your tax return. This will also help you to track the growth of your business and prepare financial statements. Additionally, you will be able to recognize any products which you may potentially be overspending on.


Post new comment

The content of this field is kept private and will not be shown publicly.
This question is for preventing automated spam submissions.