Growing Your Business: Why Separating Business and Personal Finances is Good
Growing Your Business: Why Separating Business and Personal Finances is Good
This article is not all about finances. Well, it's partially about finances. More importantly, it's about how to grow your business. Growing your business doesn't just happen by magic. There's no business growth fairy that takes away a balance sheet and leaves a bigger business under your pillow. It takes consistent, carefully investment to create your own success.
And that investment starts with something that you might not have considered: Separating your business and personal finances. Surprised? Here are the reasons.
First, you'll want to separate your business and personal finances for tax purposes. If you keep them combined, you might not be eligible for certain deductions, but if you separate them, you may be entitled to deduct expenses for your home office and mileage allowance. Likewise, you may be responsible for paying certain taxes on your business that do not apply to your personal income. Separating your finances is the only way to ensure that you properly follow all tax laws and receive all advantages to which you are entitled by law. That can grow your business by clarifying your paperwork and possibly making more money available (because of more deductions) which you can reinvest in your business.
Another important reason for separating your finances is to get a loan or a grant so you can invest in your business. Separating your finances helps to establish a paper trail and helps you to create financial reports that demonstrate the business’ performance. If your finances are separated it will be much easier to determine which income and expenses belong to the business itself.
Third, separating your finances can help you decide how best to grow and develop the business as well. You will be able to see the areas in which the business excels as well as those areas in which it needs some extra help. You can generate targeted, accurate reports and financial statements that show at a glance how the business performs in various areas.
How Can I Separate My Business and Personal Finances?
The easiest way to separate your business and personal finances is to open a business bank account. If you use credit to make business-related purchases, apply for a card in the name of the business. Have all payments made to the business account, and use only those funds and the business credit card to make purchases.
How Do I Get Paid?
You have multiple options for paying yourself. Some business owners find it best to write themselves a set paycheck every week. If you are confident that the business will retain enough funds to pay your salary each time, this will streamline the process and make it easier to accurately pay your personal income taxes.
However, if your business is new or unstable, you may find it better to pass funds through the business account to your personal account. You might decide to retain just enough money in the business account to pay for expenses, and transfer everything that is left into your personal account. This is an ideal solution for those who have many personal expenses but few business expenses and earn wildly different sums on each contract.
Setting Up and Maintaining Bookkeeping and Accounting
Many business owners find themselves confused and overwhelmed by the paperwork that is involved in maintaining separate accounts. Consider hiring outside help. A Virtual Assistant company can set up and maintain your bookkeeping and accounting. Your VA can even handle payroll, writing your paycheck each week. You can maintain as much or as little control over the process as you desire. You can hire the VA for a set number of hours per week or per month, or simply retain his or her services on a per-project basis.
Ultimately, separating your business and personal finances can seem like a complicated task in the short term but in the long term it is an effective way to grow your business.
Growing Your Business Why Separating Business and Personal Finances is Good - To learn more about this author, visit Heather Villa's Website.
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Growing Your Business: Why Separating Business and Personal Finances is Good
This article is not all about finances. Well, it's partially about finances. More importantly, it's about how to grow your business. Growing your business doesn't just happen by magic. There's no business growth fairy that takes away a balance sheet and leaves a bigger business under your pillow. It takes consistent, carefully investment to create your own success.
And that investment starts with something that you might not have considered: Separating your business and personal finances. Surprised? Here are the reasons.
First, you'll want to separate your business and personal finances for tax purposes. If you keep them combined, you might not be eligible for certain deductions, but if you separate them, you may be entitled to deduct expenses for your home office and mileage allowance. Likewise, you may be responsible for paying certain taxes on your business that do not apply to your personal income. Separating your finances is the only way to ensure that you properly follow all tax laws and receive all advantages to which you are entitled by law. That can grow your business by clarifying your paperwork and possibly making more money available (because of more deductions) which you can reinvest in your business.
Another important reason for separating your finances is to get a loan or a grant so you can invest in your business. Separating your finances helps to establish a paper trail and helps you to create financial reports that demonstrate the business’ performance. If your finances are separated it will be much easier to determine which income and expenses belong to the business itself.
Third, separating your finances can help you decide how best to grow and develop the business as well. You will be able to see the areas in which the business excels as well as those areas in which it needs some extra help. You can generate targeted, accurate reports and financial statements that show at a glance how the business performs in various areas.
How Can I Separate My Business and Personal Finances?
The easiest way to separate your business and personal finances is to open a business bank account. If you use credit to make business-related purchases, apply for a card in the name of the business. Have all payments made to the business account, and use only those funds and the business credit card to make purchases.
How Do I Get Paid?
You have multiple options for paying yourself. Some business owners find it best to write themselves a set paycheck every week. If you are confident that the business will retain enough funds to pay your salary each time, this will streamline the process and make it easier to accurately pay your personal income taxes.
However, if your business is new or unstable, you may find it better to pass funds through the business account to your personal account. You might decide to retain just enough money in the business account to pay for expenses, and transfer everything that is left into your personal account. This is an ideal solution for those who have many personal expenses but few business expenses and earn wildly different sums on each contract.
Setting Up and Maintaining Bookkeeping and Accounting
Many business owners find themselves confused and overwhelmed by the paperwork that is involved in maintaining separate accounts. Consider hiring outside help. A Virtual Assistant company can set up and maintain your bookkeeping and accounting. Your VA can even handle payroll, writing your paycheck each week. You can maintain as much or as little control over the process as you desire. You can hire the VA for a set number of hours per week or per month, or simply retain his or her services on a per-project basis.
Ultimately, separating your business and personal finances can seem like a complicated task in the short term but in the long term it is an effective way to grow your business.
Growing Your Business Why Separating Business and Personal Finances is Good - To learn more about this author, visit Heather Villa's Website.
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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