Like most other small business owners, you probably used your own savings to launch your company and get it up on its feet. While there's nothing wrong with this, it's very important that you treat your company as a separate entity from yourself. This means implementing a boundary between business and private finances, a move that's crucial in facilitating tactical money management.
Unless you keep your business and personal accounts separate, you'll likely face a nightmare sifting through your statements during tax season. Chances are that you'll include personal expenses in your company's tax returns, or even fail to spot them altogether. None of these two instances will lead to pleasant outcomes, so why not just split your accounts and keep your sanity?
The need to split your finances extends to your professional image. Customers and suppliers have to feel confident about how you run your company for them to take you seriously. In other words, the lack of a proper boundary between the business and its owner will make others start doubting your professionalism. Fortunately, correcting this is as simple as setting up a dedicated business account.
One of the benefits of structuring your business as a corporation is the shield that this status provides to your personal assets. For this to work, you have to separate them from those owned by your company. Otherwise, any action filed against your company by creditors will expose your wealth to forfeiture.
Your ability to prove that your enterprise doesn't rely on your personal resources will be of utmost importance when applying for business loans. Lenders will also want to see your company's credit history, but this will be nonexistent if there's nothing to separate your personal and business income. You'll only have yourself to blame if this ends up limiting your borrowing power.
It's your responsibility as the head of your organization to keep its financial status within your sights at all times. While nothing can substitute proper accounting in this regard, drawing a clear line between what's yours and what belongs to your company will definitely help. Your accountants will also have an easier time going about their job as well.
Detaching your financial life from that of your firm will minimize the temptation to use personal funds to sort out business expenses. You'll also be able to increase your earnings as a shareholder without compromising the solvency of your company. It's not unusual for otherwise profitable ventures to be run into the ground simply because their shareholders adopted the wrong mindset with regards to finances. The only way to avoid this possibility is to run your business as an independent entity.
You already know that blurring the lines between leisure and business is always a bad idea. So why are you still using a casual approach to manage your firms's finances? There's no discounting the convenience of blending them with your own, but the severe consequences you risk facing should make you think otherwise.
Unless you keep your business and personal accounts separate, you'll likely face a nightmare sifting through your statements during tax season. Chances are that you'll include personal expenses in your company's tax returns, or even fail to spot them altogether. None of these two instances will lead to pleasant outcomes, so why not just split your accounts and keep your sanity?
The need to split your finances extends to your professional image. Customers and suppliers have to feel confident about how you run your company for them to take you seriously. In other words, the lack of a proper boundary between the business and its owner will make others start doubting your professionalism. Fortunately, correcting this is as simple as setting up a dedicated business account.
One of the benefits of structuring your business as a corporation is the shield that this status provides to your personal assets. For this to work, you have to separate them from those owned by your company. Otherwise, any action filed against your company by creditors will expose your wealth to forfeiture.
Your ability to prove that your enterprise doesn't rely on your personal resources will be of utmost importance when applying for business loans. Lenders will also want to see your company's credit history, but this will be nonexistent if there's nothing to separate your personal and business income. You'll only have yourself to blame if this ends up limiting your borrowing power.
It's your responsibility as the head of your organization to keep its financial status within your sights at all times. While nothing can substitute proper accounting in this regard, drawing a clear line between what's yours and what belongs to your company will definitely help. Your accountants will also have an easier time going about their job as well.
Detaching your financial life from that of your firm will minimize the temptation to use personal funds to sort out business expenses. You'll also be able to increase your earnings as a shareholder without compromising the solvency of your company. It's not unusual for otherwise profitable ventures to be run into the ground simply because their shareholders adopted the wrong mindset with regards to finances. The only way to avoid this possibility is to run your business as an independent entity.
You already know that blurring the lines between leisure and business is always a bad idea. So why are you still using a casual approach to manage your firms's finances? There's no discounting the convenience of blending them with your own, but the severe consequences you risk facing should make you think otherwise.
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