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Keeping Your Finances Separate

One of the most common mistakes new business owners make is mixing their personal and business finances. If you want to have a better grasp on your finances, then it is vital that you keep these two things separate from each other.

For instance, that new backpack you bought for your kids simply cannot be a considered a business expense, yet you used your company credit card because you had it with you that day. While you can pay it back, it could really jumble things up down the road, especially when it turns into a habit.

It needs to be stated here that all business transactions have to be accounted for. However, if you are going to use your business’ resources for personal expenses, then you can probably see how that can complicate things. You probably would not want that.

That being said, you will need to separate your business and personal accounts. This applies both to your bank accounts and credit cards. While this may seem strict, it is you who will benefit from it in the end by saving yourself several hours of accounting work separating one expense type from another.

Make Accounting A Weekly Habit

One of the worst mistakes a business owner can make is to wait until the last minute before fixing their finances. Yet, this is what most people do. Most entrepreneurs put it off until the tax deadline is almost upon them before working on their books. That is simply lazy and irresponsible, and no way to run an efficient business.

That is why we recommend that you make it a regular habit. You should look over the details of your finances at least on a weekly basis. It would take you as short as 15 minutes every week yet it can save you from massive headaches.

In order to fully commit to this habit, you should integrate it as part of your regular schedule. Pencil it into your calendar as you would any other appointment. This is so that you can focus on the task at hand. During that period, you should look into organizing your finances. Focus on the details so that you can see the bigger picture. Only by properly accounting your finances can you get a clear idea of where your business stands.